Some national pension contributions set to rise as new criterion take effect in July

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Some national pension contributions set to rise as new criterion take effect in July

Published: 29 Jun. 2025, 14:42

Audio report: written by reporters, read by AI

A general consultation room at the Seoul Northern Regional Headquarters of the National Pension Service is seen on March 17. [YONHAP]

A new national pension criterion will take effect starting in July, raising some subscribers' monthly contributions by up to 18,000 won ($13).

Starting July 1, the upper and lower limits for the standard monthly income used to calculate the national pension will be adjusted in the National Pension Service's (NPS) annual adjustment made every July.

For employees who split the contributions with their employer, the maximum personal increase will be 9,000 won.

This adjustment does not involve a change in the contribution rate itself, which remains at 9 percent, but reflects the annual 3.3 percent increase in the average income of all subscribers. The adjustment, while routine, may be felt more strongly by those at the high or low ends of the income spectrum.

The upper limit of the standard monthly income will rise from 6.17 million won to 6.37 million won, and the lower limit from 390,000 won to 400,000 won, according to the Ministry of Health and Welfare and the NPS. Contributions are assessed only within this range, regardless of actual income.

As a result, subscribers with monthly incomes exceeding 6.37 million won will see their contributions rise from 555,300 won (6.17 million won × 9 percent) to 573,300 won (6.37 million won × 9 percent). Employees will pay half of the increase — 9,000 won — while self-employed contributors will bear the full cost.

For example, a subscriber earning 6.3 million won per month, who previously contributed based on the 6.17 million won cap, will now pay based on their actual income.

Minister of Health and Welfare Cho Kyoo-hong speaks during a ministry meeting on the national pension at the government complex in Jongno District, central Seoul on May 29. [NEWS1]

Subscribers earning less than 400,000 won per month will also see an increase of up to 900 won. Those who previously paid 35,100 won, based on the 390,000 won floor, will now pay 36,000 won.

There will be no change for those earning between 400,000 and 6.17 million won per month. That means most subscribers will not be directly affected by this adjustment.

This is not a targeted tax increase on specific groups, but a systemized procedure reflecting the overall rise in average income. Under the National Pension Act’s enforcement decree, adjustments are automatically made each July based on the average income growth over the previous three years — 3.3 percent for this year.

Though it may cause some short-term burden, the change has a positive long-term effect of increasing future pension benefits.

Elderly citizens wait in line for a free lunch service at a public park in Jongno District, central Seoul on May 12. The National Pension Service announced that the number of those aged above 100 receiving the national pension has surpassed 200 for the first time this year with a rapidly aging population. [NEWS1]

Critics have noted that when the upper limit remained fixed from 1995 to 2010, the pension system failed to accurately reflect real income growth, thereby weakening its ability to ensure financial security in retirement.

To address this, an annual adjustment system was introduced in 2010. This year’s change is intended to better reflect real income and preserve the value of pension payments.

The National Pension Service has notified affected subscribers by mail or electronic notice by the end of June.

This adjustment is considered a necessary step to ensure stronger retirement preparedness, improve pension adequacy and maintain the financial stability of the national pension system.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY JEONG JAE-HONG [[email protected]]