On September 6, the Ministry of Health and Welfare 보건복지부 put forward the first comprehensive reform proposal for the National Pension 국민연금 since the pension system came to exist in its current form. Although the National Pension was launched in 1988, it did not provide universal coverage until 2006. The system has come under strain in recent years as a result of the rapid graying of South Korean society due to a combination of low birth rates and increased longevity.
The proposal gradually increases the current 9% premium to 13%, and increases the level of income replacement from 40% to 42%. An unusual feature of the proposal is that different generations would see the premium increase at different rates: citizens in their 50s would begin paying premiums of 13% by 2028; those in their 20s, by 2040. The Welfare Ministry said the staggered phasing-in of increases is a necessary response to South Korea’s unique demographic challenges. The Democratic Party 민주당 criticized this feature of the proposal as “internationally unprecedented” and “an attempt to worsen generational divisions.”
