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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] South Korea will significantly relax rules that reduce pension payments for working retirees, allowing those earning up to KRW 5.19 million per month to receive their full national pension starting June 17.
According to the Ministry of Health and Welfare and the National Pension Service, the revised National Pension Act raises the income threshold for pension reduction by introducing an additional monthly deduction of KRW 2 million.
Previously, pension benefits were reduced if a retiree’s income exceeded the so-called “A-value”—the average income of contributors over the past three years—which stands at KRW 3.19 million this year. Under the new rule, the threshold increases to KRW 5.19 million, meaning retirees earning below this level will receive their full pension without any reduction.
The change addresses longstanding criticism that the system discouraged post-retirement employment. In 2024 alone, approximately 137,000 pension recipients saw their benefits reduced by a combined KRW 242.9 billion due to earned income.
The new standard is being applied retroactively. The National Pension Service has already begun applying the revised threshold to income earned since January 1 this year and plans to refund previously reduced pension amounts accordingly.
For 2025, recipients earning up to KRW 5.09 million per month may be eligible for reimbursements of previously reduced benefits, although payment timing will vary depending on the finalization of income data by tax authorities.
The revision also introduces stricter provisions on disqualified beneficiaries, barring individuals who have committed serious offenses such as murdering family members or failing in their duty of support from receiving survivor pensions or related benefits. Any improperly received payments will be fully recovered with interest.
The government expects the reform to encourage greater labor participation among older adults while enhancing retirement security, and is considering further easing or abolishing pension reduction rules for higher-income brackets in the future.
Alphabiz Reporter Ellie Kim(press@alphabiz.co.kr)
https://www.alphabiz.co.kr/news/view/1065619782503110
This article is based on global economic content from Alphabiz, which distributes English-language news on Korean markets and companies to international audiences.
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