South Korea Proposes Pension Reforms

Sunrise in downtown Seoul, city skyline, aerial view of N. Seoul Tower at Namsan Park in morning twilight, viewpoint after trekking from Inwangsan Mountain, South Korea

Four policy options for revising the income replacement and contribution rates for South Korea's national pension (Korean) will be debated by the parliament in the coming months. The options are:

  • Maintaining the current national pension. The income replacement rate would be reduced to 40% by 2028, 0.5% down each year from the current replacement rate of 45%. The contribution rate would be set at 9% and a basic pension of KRW 0.3m would be payable. Also, the range of beneficiaries for a basic pension would be expanded to include those with income levels of less than 70% by 2021.
  • Securing the basic pension. The current national pension would be maintained, and the basic pension would be increased from 2022 to KRW 0.4M.
  • Securing the old-age income. The income replacement rate would be 45% from 2021, and a 12% contribution rate would be payable from 2031, increasing by 1% every five years from 2021.
  • Securing the old-age income. The income replacement rate would be set at 50% from 2021, and a 13% contribution rate would be payable from 2036, increasing by 1% every five years from 2021.

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Fiona Webster
by Fiona Webster

Principal, Mercer’s Law & Policy Group

Stephanie Rosseau
by Stephanie Rosseau

Principal, Mercer’s Law & Policy Group

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