Good News: National Pension Reduction Threshold Eased

Exciting news has emerged regarding the easing of the reduction threshold for the National Pension! Starting now, recipients of the National Pension with a monthly income of 5.19 million KRW or less will be able to receive their full pension without reductions. This change is expected to benefit approximately 100,000 people annually and is anticipated to have a positive impact on securing income in retirement.

What are the New Reduction Criteria?

The Ministry of Health and Welfare announced the implementation of an amendment to ease the reduction criteria for old-age pensions. Previously, if an old-age pension recipient's earned or business income exceeded the average monthly income of National Pension subscribers over the last three years (the 'A value'), their pension would be reduced. This year's 'A value' is approximately 3.193511 million KRW, but this will now be raised by 2 million KRW to 5.193511 million KRW.

• The lower income brackets (1st and 2nd tiers) out of the 5 reduction tiers will be abolished.
• For instance, someone with a monthly income of 4.1 million KRW, who would have faced a reduction previously, will now receive their full pension under the new standards.

A System to Support Economic Activity for the Elderly

This easing of the reduction criteria is interpreted as a measure to support the economic activities of the elderly population. In the past, the structure where pensions were reduced for those who continued to work discouraged many from seeking re-employment or starting self-employment. However, this change now opens up a path to secure a stable retirement income while continuing to engage in economic activities.

Expected Changes Moving Forward

The government anticipates that approximately 100,000 additional individuals will benefit from this system improvement each year. As of May this year, about 90,000 recipients had their reductions suspended, receiving an additional pension amount of approximately 19.5 billion KRW. Furthermore, the revised criteria will be automatically applied to the 2025 income without the need for a separate application.

• The number of people eligible for refunds is estimated to be around 100,000, with a total refund amount projected to reach 44.5 billion KRW.
• The average refund per person is expected to be around 600,000 KRW.

This news about the eased National Pension reduction threshold will be a hopeful change for many. We look forward to a better environment for the elderly who wish to continue their economic activities even in retirement.