More Middle-Aged Preparing for Retirement, but Relying Only on the National Pension System Leaves Living Expenses Uncertain

Six Out of Ten Rely on National Pension System for Retirement
But Average Monthly Benefit Is Only 600,000 Won
Income Gap Between Retirement and Pension Start Remains an Issue
"A Multi-Tier Security System Including Retirement Pensions Is Needed"

Six out of ten middle-aged people preparing for retirement are relying on the National Pension System. However, experts point out that the benefits are insufficient to cover living expenses and that there is a period of income gap after retirement until pension payments begin, making it difficult to ensure a stable retirement with the National Pension System alone.

Growing Number of Middle-Aged Preparing for Retirement...6 Out of 10 Rely on the National Pension System

According to the 'Social Survey of Middle-Aged People (Aged 40–64) Over the Past 10 Years' released by the Ministry of Data and Statistics on September 21, the proportion of those who said they are preparing for or have finished preparing for retirement increased from 75.8% in 2015 to 81.9% in 2025, a 6.1 percentage point rise. Among them, 61.0% named the National Pension System as their main means of retirement preparation, up 9.3 percentage points from 51.7% ten years ago. The increase was particularly prominent among those aged 60 to 64, with the proportion depending on the National Pension System in this age group rising from 40.2% to 62.1%, an increase of 21.9 percentage points. This is believed to be due to a previously low pension enrollment rate in this age group, coupled with more people recently qualifying through catch-up payment programs. In contrast, those mainly relying on private sector retirement safety nets are decreasing. The proportion choosing private pensions fell by half from 11.7% to 5.4%, and the share of those relying on savings, deposits, and savings-type insurance also dropped by 5.2 percentage points from 19.9% to 14.7%.

'Pocket Money Pension' and Income Gaps..."You Can't Rely Only on the National Pension System"

This survey asked respondents to choose only their single main retirement preparation method, so selecting the National Pension System does not imply that no other preparations are being made. Nevertheless, experts warn that excessive reliance on the National Pension System is risky due to its limitations. The primary concern is the benefit amount. According to the National Pension Research Institute's 'Retirement Security Panel Survey', the monthly average benefit for recipients is in the 600,000 won range, and even those paying in for over 20 years only receive about 1 million won a month. This falls far short of the 'appropriate retirement living expenses' of 2 million won per month for households headed by people in their 60s or older, and even does not reach the 'minimum living expenses' of 1.3 to 1.5 million won per month. In other words, it is difficult to maintain basic living standards in retirement with the National Pension System alone. Another obstacle is the period of 'income gap (crevasse)' between retirement and the commencement of pension benefits. The average age at which the middle-aged retire from their main job is in their late 50s to around 60, but the eligibility age for the National Pension System is 65 (for those born since 1969). This results in at least a five-year gap, and unless individuals have sufficient private assets such as savings or personal pensions, it can be difficult to afford living expenses during this period.

"A Multi-Tier Income Security System, Including Retirement Pensions, Must Be Established"

Experts emphasize the need to establish a 'multi-tier old-age income security system' in which public and private pensions complement each other to ensure a healthy retirement. The government is also pursuing reforms to the retirement pension system to address the heavy reliance on the National Pension System and the immediate post-retirement income gap. The plan includes gradually making the introduction of retirement pensions mandatory for each workplace to reduce coverage gaps, and expanding tax incentives for those who opt to receive their retirement benefit as a pension rather than a lump sum, as more than 90% currently choose the latter. Nam Jae-woo, Chairman of the Korea Pension Association, stated, "It is necessary to redefine accumulation-type retirement pensions that supplement public pensions as a central pillar of a multi-tier pension system and to strengthen retirement income security by growing those funds and facilitating pensionization."

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