National Pension Back Payments Triple in Two Years, Rendering ‘119-Month Limit’ Powerless

Rebound After Decline Following Introduction of the '119-Month Rule'

240,000 Applications Last Year, Three Times the 2023 Figure

The trend of "post-payment" (Chunap), where people retroactively pay previously skipped National Pension Service (NPS) contributions to extend their insured period, is surging once again. Although the authorities imposed a maximum limit of less than 10 years (up to 119 months) to block so-called "investment loopholes" in which people deposit large sums at once to easily secure a higher retirement pension, the effect lasted for barely two years. After dropping sharply immediately following the regulation, the number of applications has since rebounded steeply, surpassing 240,000 cases annually. As cases surge where foreigners with short stays in Korea exploit this system to qualify for lifelong pension benefits, a renewed controversy is growing over fairness for diligent contributors.

Annual Cases Surpass 240,000 After Regulation Effect Fades

The National Pension Service Happiness Pension Hall located in Jeonju, Jeonbuk. The Asia Business Daily DB.

According to data submitted to the National Assembly by the National Pension Service on September 10, the total number of Chunap applications filed by both Korean and foreign applicants last year reached 244,329. After the 119-month limit was introduced in December 2020, the number of applications plummeted to 215,460 in 2021, 148,439 in 2022, and 87,644 in 2023, hitting a low point. Since then, the figures have rebounded, increasing by nearly 2.8 times compared to the lowest point. In just the first half of this year alone, 106,838 applications were already filed, quickly approaching the all-time high of 271,303 cases recorded in 2020.

Introduced in 1999, Chunap was originally designed as a social safety net to assist those who couldn't pay contributions due to job loss, business closure, parenting, and similar circumstances. To be eligible for the ordinary lifetime old-age pension, individuals must have at least ten years (120 months) of contributions. For example, even if someone’s actual paying period was only seven years, they could make a lump-sum payment for the missing three years and thereby qualify for the pension. However, since 2016 when the eligibility criteria were expanded to include non-working spouses and similar exempted groups, the nature of the system has dramatically shifted. It has since become a loophole for individuals to invest large sums just before retirement and instantly boost their future pension amount, leading to persistent inequality with the majority of members who have paid their contributions consistently over decades.

Chunap-Based Pensions for Foreigners Soar by 83 Times... Authorities Amend System

After the introduction of an upper limit, the use of Chunap briefly calmed, but without a change in the law, it is rapidly expanding again due to a reevaluation of the pension’s value and growing anxiety over aging. An even more critical issue is the surge in foreign applicants. Applications for Chunap by foreign nationals jumped from 87 cases in 2016 to 1,517 last year—an increase of more than 17 times in 10 years. The number of foreigners who leveraged Chunap to meet the ten-year requirement and secured the right to old-age pension soared from just 27 in 2016 to 2,250 as of the first half of this year, an approximately 83-fold increase. This reveals an exploitable pattern where foreigners, who do not stay in Korea for long periods, pay only the minimum contributions to establish history and then, before leaving the country, make a large Chunap payment to secure a lifelong pension.

Amidst mounting criticism and presidential rebukes, the Ministry of Health and Welfare and the NPS swiftly began tightening entry regulations for foreigners. Only months in which an individual actually stayed in Korea for 15 or more days will count toward the resident period, thereby blocking Chunap for months spent abroad. Furthermore, authorities decided to open access only on a reciprocity basis, allowing the benefit for foreigners only if the counterpart country provides the same benefit to Korean citizens. The National Assembly is also moving quickly. Kim Mi Ae, a lawmaker from the People Power Party, has sponsored an amendment that incorporates this reciprocity principle, allows Chunap only for foreigners who have paid actual contributions for at least one year, and limits the eligible Chunap period to no more than the number of months actually contributed. This aims to eliminate the practice where someone works just one month but pays up for ten years in one lump sum.

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