[Financial Planning for the 100-Year Life] Starting Retirement Planning with the National Pension

Published 20 May.2026 06:07(KST)

Jinwoong Kim, Research Fellow at NH Investment & Securities 100-Year Life Research Institute

In South Korea, the National Pension Scheme serves as a crucial means of preparing for retirement and has a significant impact on the lives of citizens in their later years. Although there are concerns such as the depletion of the National Pension Fund, these are issues that should be resolved by the state. From an individual's perspective, it is important to make the most of the National Pension Scheme for retirement as long as the system is maintained. Since the majority of economically active people are enrolled in the National Pension Scheme, it can be regarded as the starting point for retirement planning. Let us briefly look at why the National Pension is useful for retirement preparation.

The National Pension is a form of social insurance that provides a certain amount of benefit to help with living expenses in case of old age, disability, or death, when income decreases. There are several types of pensions, such as the old-age pension, disability pension, and survivors' pension, but the most fundamental is the "old-age pension." The old-age pension is payable for life once an individual has paid pension premiums for at least 10 years and has reached the eligible age for pension benefits. The payment amount is the sum of the basic pension amount and the additional amount for dependents.

The National Pension premium is calculated based on income and is more favorably designed for low-income earners. According to the National Pension Service's expected monthly old-age pension table (as of January 2026), an individual who pays 95,000 won per month for 20 years will receive 450,800 won, while someone who pays 190,000 won will receive 558,300 won. Even if the payment amount is doubled, the pension benefit does not double. However, except in cases where the recipient passes away early while receiving the pension, the actual amount received is higher, so it is not a loss.

One point to note is that the age at which pension benefits begin depends on the year of birth. As life expectancy increases, the pension commencement age is gradually being delayed. For those born up to 1952, benefits can be received from age 60, but after that, the starting age is postponed by one year every four years, so those born in 1969 or later will be eligible to receive the old-age pension only at age 65. The issue is that many people retire from their main job before age 60, so if the National Pension is the sole means of retirement preparation, there may be an income gap until the pension benefits begin.

So what happens if you have income while receiving your pension? For the first five years after reaching the eligible age, if your income exceeds a certain threshold, the basic pension amount can be reduced by up to 50%, and the dependent family pension is not paid. The reduction rate is adjusted annually, and after five years, the full pension is paid regardless of income. However, not all income leads to a reduction. Only if the average monthly income exceeds the average income of all National Pension subscribers over the past three years (3,193,511 won as of 2026) will the pension be subject to reduction. At this time, only employment and business income (including real estate rental income) are counted; financial income is excluded.

If you have only employment income, your salary must be at least 50.6 million won per year (4.21 million won per month) to be subject to reduction. Starting June 17 this year, if excess income is less than 2 million won per month, you will be excluded from the reduction, so in most cases, there is little need to worry about pension reduction. Furthermore, even if your pension is reduced due to additional income, if you lose the extra income within five years, you can receive the full pension amount again.

Therefore, even if you have income after retirement through reemployment or other means, the burden regarding the National Pension is not as great as you might think. While paying into the National Pension may feel like a burden at times, it is helping to provide at least a minimum level of retirement preparation for citizens. I hope you will utilize the National Pension well to ensure a stable life in retirement.