People Born in 2020 Receive 80 Million Won Less in National Pension Than Those Born in 1970

Announcement of National Pension Research Institute Report
People Born in 2000 Pay About 12.55 Million Won More

If the current National Pension insurance premium rate and income replacement rate are maintained, those born in 2020 will pay more than 10 million KRW in pension premiums compared to those born in 1970, but receive about 80 million KRW less in pension benefits, according to a study.

According to the report titled "Review of the Multiple Disadvantage Experiences and Support Measures for the Youth in the National Pension System," published on the 18th by the National Pension Research Institute, a study of total wages by cohort found that if the current system with a premium rate of 9% and an income replacement rate of 40% is maintained, those born in 2020 will receive about 79.44 million KRW less in lifetime pension benefits compared to those born in 1970.

However, the total amount of premiums paid over a lifetime is actually about 12.55 million KRW higher for those born in 2020 than for those born in 1970. This result reflects the pension systems applied to the 1970 and 2020 cohorts.

The research team also proposed reform models for the National Pension system. They set Plan 1 with a premium rate of 12% and an income replacement rate of 45%, and Plan 2 with a premium rate of 13% and an income replacement rate of 50%.

If the current National Pension contribution rate and income replacement rate are maintained, those born in 2020 will pay more than 10 million won in pension contributions compared to those born in 1970, but will receive about 80 million won less in pension benefits.
[Photo by Yonhap News]

As a result, under Plan 1, those born in 2020 would pay 47.63 million KRW more in premiums than those born in 1970, but the pension benefit gap would decrease to 55.81 million KRW. Under Plan 2, those born in 2020 would pay 60.5 million KRW more, but the pension benefit gap would further reduce to 34.08 million KRW.

The research team also suggested providing separate pension credits and other measures to promote fairness between classes and encourage pension enrollment among the youth.

According to the study, the premium payment rate among the youth is 44.3%, which is 24.7% lower than the 69% rate among non-youth groups. The blind spot rate is also higher among the youth at 55.7%, compared to 31.1% for non-youth groups.

In particular, the blind spot rate for youth aged 18 to 24, who are at the initial age eligible to join the National Pension, was 82% as of 2020, meaning more than 8 out of 10 people in this age group are in the blind spot for National Pension enrollment.

The study also included a proposal to introduce a lifetime first-time pension premium support system, automatically enrolling individuals in the National Pension upon turning 18, and allowing the use of a deferred payment system after employment for any unpaid periods.

The research team explained, "To reduce the intergenerational gap, it is necessary not only to focus on financial stabilization measures that simply increase the burden but also to make efforts to increase benefits for the younger generation," adding, "It is necessary to strengthen existing premium support and credit systems and introduce new support systems that correspond to the labor market and pension system status and characteristics of youth."

This content was produced with the assistance of AI translation services.