Contribution Rate to Increase by 0.5%p Annually for 8 Years
Income Replacement Rate to Rise to 43% Next Year
Military Service and Childbirth Credits to Be Expanded
Agreement Reached on Formation of Pension Reform Special Committee
Six Members Each from People Power Party and Democratic Party, One from Non-Negotiating Groups
On the 20th, the ruling and opposition parties reached a sudden agreement on a national pension reform plan to raise the contribution rate (amount paid) from the current 9% to 13%, and the income replacement rate (amount received) from 40% to 43%. This is the first time in 18 years since 2007 that the ruling and opposition parties have agreed on pension reform.
On the morning of the same day, Kwon Seong-dong, floor leader of the People Power Party, and Park Chan-dae, floor leader of the Democratic Party of Korea, signed the "Agreement on Pension Reform" at a meeting presided over by National Assembly Speaker Woo Won-sik. Accordingly, the contribution rate will increase by 0.5 percentage points annually for eight years starting next year. The income replacement rate will rise from the current 40% to 43% starting next year.
The credit applied to those who have completed military service was increased from the current 6 months to a maximum of 12 months. The childbirth credit, which currently counts additional subscription periods from the second child onward, was expanded to include the first child. The target group for contribution support for low-income regional subscribers will also be expanded.
Speaker Woo Won-shik is meeting with the floor leaders of the ruling and opposition parties at the National Assembly on the 18th. From the left, Kim Sang-hoon, Policy Committee Chair of the People Power Party, Kwon Seong-dong, Floor Leader, Speaker Woo, Park Chan-dae, Floor Leader of the Democratic Party of Korea, and Jin Seong-jun, Policy Committee Chair. 2025.3.18 Photo by Kim Hyun-min
Measures for financial stabilization and structural reforms concerning national, basic, retirement, and private pensions will be discussed later by forming a special committee on pension reform in the National Assembly, and will be handled through bipartisan agreement.
The special committee will consist of 13 members: 6 from the People Power Party, 6 from the Democratic Party, and 1 from non-negotiating groups. The chairperson is expected to be from the People Power Party. The committee will operate until December 31 of this year, with possible extensions if necessary.
The agreement is scheduled to be processed through the National Assembly’s Health and Welfare Committee and the Legislation and Judiciary Committee in the afternoon, followed by a plenary session. If it passes the plenary session, it will be the first pension reform in 18 years since 2007 and the third pension reform since the introduction of the national pension in 1988.
Speaker Woo expressed gratitude to the ruling and opposition parties, saying, "Despite the tense situation surrounding the Constitutional Court impeachment trial these days, many people, including the floor leaders of both parties, put their heads together for several days and reached an agreement." He added, "It was a precious process for the ruling and opposition parties to come together focusing on the lives of the people during a time of high tension and deep conflict, and it is an issue that will be greatly recorded in our political history."
After signing the agreement, Floor Leader Kwon told reporters that he was criticized for failing to enforce his own pension reform plan of a 13% contribution rate and 40% income replacement rate. He said, "The upcoming National Pension Special Committee will discuss other reform measures besides this parameter reform, so I have high expectations," and explained, "We will do our best to reform in a direction that further enhances the sustainability of the national pension and reduces the burden on future generations."
Speaker Woo Won-shik is meeting with the floor leaders of the ruling and opposition parties at the National Assembly on the 18th. From the left, Kwon Seong-dong, floor leader of the People Power Party, Speaker Woo, and Park Chan-dae, floor leader of the Democratic Party of Korea. 2025.3.18 Photo by Kim Hyun-min
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