National Pension Chunap Controversy Stems from 'Loose System Design'... Research Service Urges Urgent Redesign of Application Period and Eligibility

Far Below Global Standards in Application Timeframes

Limitations on Application Period and Eligibility Grounds Proposed

Amid ongoing criticism that the National Pension Service’s additional payment (chunap) scheme has devolved into a “legitimate financial strategy,” analysis suggests that the root problem lies in the program’s loosely designed structure. Although the government recently began tightening eligibility due to controversy surrounding short-term foreign subscribers making retroactive contributions, the core issue is the structural vulnerability of the current system itself, not a particular nationality.

National Pension Service Happiness Pension Center. The Asia Business Daily DB.

According to a report titled “Desirable Improvements to the National Pension Service’s Additional Payment Program,” published by the National Assembly Research Service on September 11, the current chunap system essentially allows those with just a single month’s premium payment to retroactively restore up to 119 months (less than 10 years) of previous gaps in their payment history. A 2020 legal amendment capped the additional payment period at under 10 years. However, the abnormal structure—in which the vast majority of applicants focus on the 108 to 119 month range, close to the legal limit—remains unaddressed.

This concentration is the result of incentives for individuals to retroactively secure eligibility for old-age pensions by fulfilling the minimum 10-year subscription period. Especially since there are no restrictions on when one can apply for chunap, it has become common practice to make large lump-sum payments right before retirement at the most advantageous time. This has sparked ongoing debate over fairness between those who consistently and diligently paid premiums throughout their careers and these lump-sum contributors.

Major overseas pension systems have long restricted additional payments to narrowly defined exceptions. For example, France allows retroactive contributions for up to 12 quarters in cases of schooling or incomplete enrollment periods; Germany strictly limits school-related chunap to before age 45. In the UK, individuals must apply within six years for up to six years of uncredited periods. Even Japan, whose system closely resembles Korea’s, only allows applications within 10 years from the exemption or postponement of premiums. In contrast, Korea broadly recognizes eligible periods for chunap and does not generally limit when applications can be made.

The report recommends imposing a time limit for applications, allowing additional payment claims only within a certain period after the end of the qualifying event, to head off predictable side effects. It also proposes a minimum payment period requirement to prevent individuals from joining the scheme voluntarily and immediately making large lump-sum chunap payments to secure benefits. Furthermore, the report highlights the need to address loopholes that let applicants artificially lower their burden by calculating premiums based on their income at the time of application. It stresses the importance of closely examining the long-term financial burden masked by short-term lump sums and ensuring generational fairness. The report suggests reconsidering grounds for additional payment eligibility. The scope, which is currently broad, should instead be redefined to focus on coverage gaps arising from “social risks” individuals cannot control—such as schooling, childrearing and caregiving, military service, career interruptions, and unemployment.

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