The Korea Herald

ssg
소아쌤

Voluntary subscribers for state pension service declining

By Yoon Min-sik

Published : March 28, 2024 - 14:47

    • Link copied

This March 12 photo shows the inside of the northern regional headquarters of the National Pension Service in Seodaemun-gu, Seoul. (Yonhap) This March 12 photo shows the inside of the northern regional headquarters of the National Pension Service in Seodaemun-gu, Seoul. (Yonhap)

The number of South Koreans who voluntarily subscribe to the National Pension Service continued on a downward trajectory last year, according to the NPS on Thursday.

As of November of 2023, 858,829 of those subscribed to the state-run pension plans were categorized as voluntary subscribers. The National Pension Act mandates that anyone living in South Korea with a fixed income -- including foreign nationals -- between the age of 18 and 59 must be subscribed to the NPS, but a number of people choose to do so without the state requirement.

The number of voluntary subscribers to the NPS had been on the rise, peaking at 947,855 in January of 2022. However, the number dipped down to 866,314 in December of that same year and continued to fall last year.

The decrease is possibly due to the state-run pension plan losing some of its appeal after the government in 2022 made it tougher to be a beneficiary. As of September of 2022, only those with an annual combined income of 20 million won ($15,000) or less who are at least 63 years of age can receive the benefits. This changed from the previous required annual income of 34 million won or less.

After the new policy was implemented, 281,630 people that had previously been beneficiaries lost their benefits by making above the 20-million-won cutoff, according to the NPS data revealed by Rep. Choi Hye-young of the main opposition Democratic Party earlier this month.

The NPS said last year that its pension funds will be fully drained by 2055 if the country maintains its current course, largely due to South Korea's record-low birth rates that keep dropping. Subscribers for the pension service are expected to decrease even further when the nation's working population decreases.

A report by the state-run Korea Employment Information Service shows that the country's economically active population -- the population of those aged 15 or above who are willing and able to work -- will start decreasing after peaking at 29.5 million in 2027.