The National Pension is a defined benefit program for the public, combining earnings-related and redistributive components together. It is designed to guarantee an appropriate income, making provisions for a wide range of social risks, including old age, disability and death. With the system, the income insured persons earned during the insured period is recalculated into the present value, and the benefit is annually revaluated based on the national consumer price fluctuation.
Pension Amount = Basic Pension Amount ⅹ Payment rate or restriction rate by the benefit type + Dependents’ Pension Amount
[ Basic Pension Amount ]
= [2.4(A+0.75B)×P1/P + 1.8(A+B)×P2/P + 1.5(A+B)×P3/P + 1.485(A+B)×P4/P +
1.2(A+B)×P23/P + X(A+A)×C/P + X(A+A/2)×6/P] x (1+0.05n/12)
A = The average of the total insured persons’ Standard Monthly Income over the last 3 years prior to the commencement of pension payment
B = The average of the Standard Monthly Income during the insured period of the insured person B is calculated by dividing the sum of the Standard Monthly Income during the insured period of the insured person, adjusted to its current value as of the year prior to the commencement of pension payment according to the annual revaluation rate as announced by the Minister of Health and Welfare by the entire insured months.
P = Entire insured months of the insured person (Only when calculating an Old-age Pension, the childbirth credit period and military service credit period are included)
1988 - 1998
1999 - 2007
2008 - 2027
2028 and thereafter
|Constant||2.4||1.8||1.5 (decreases by
0.015 every year)
|Income-Replacement Rate||70%||60%||50%(decreases by
0.5%p every year)
n = Number of insured months exceeding 20 years (Only when calculating an Old-age Pension, the childbirth credit period and military service credit period are included)
X = The constant among 1.5 ~ 1.2 at the moment of attaining the right to an Old-age Pension
C = Additional insured period granted for childbirth: 12, 30, 48 or 50 months (when split to both parents: 6, 15, 24, or 25)
The additional insured period conceded for childbirth or military service is granted only to the Old-age Pension
The DPA is an additional benefit in the form of allowance for another family member. It is given to the spouse, children, or parents of a beneficiary (in the case of Survivor Pension, the insured person) whose livelihoods are maintained under the help of the beneficiary.
Scope of the dependents and DPA (Applicable from April 2015 to March 2016)
An Old-age Pension is the major benefit in the National Pension program which is designed to guarantee the insured person's old-age income when he/she becomes economically less active or inactive in old-age. Insured persons who have been insured more than 10 years can be paid the Old-age Pension sometime after turning 60 years old (exact age varies according to year of birth).
When an old-age beneficiary has a change in his/her income activity, please contact NPS.
|Birth Year||Age for Old-age Pension Payment|
|Old-age Pension||Early Old-age Pension||Divided Pension|
|1953 - 1956||61||56||61|
|1957 - 1960||62||57||62|
|1961 - 1964||63||58||63|
|1965 - 1968||64||59||64|
|1969 and beyond||65||60||65|
The Disability Pension is provided to a person having a physical or mental illness even after being treated for the disease or injury which came about during his/her insured period. The Disability Pension is paid while the beneficiary has the disability, and the benefit level is determined on the severity or conditions of physical or mental illness.
There is no required minimum insured period for a Disability Pension; but it is not paid to a person who has not paid contributions with sincerity. In other words, Disability Pension benefits are not allowed to be paid to a person who has not made any contributions up to the point that he/she is first examined medically for the relevant disease or injury, or whose contribution period is less than 2/3 of the total period during which contributions should have been paid (except for the case where the unpaid period is less than six months).
The degree of disability is determined by NPS and it is classified into 4 degrees depending on his/her physical or mental conditions. The degree of disability is determined at the time when any injury or disease as the cause of the disability is medically cured or such symptoms are fixed (completely cured) to the extent that further improvement from additional treatment can be expected.
However, if the symptoms are not completely cured even after one and a half years since the first medical examination of the relevant disease or injury, the degree of disability is determined on the basis of the day when the one and half years have passed since the first medical examination..
Further, when a person is not eligible for a Disability Pension on the date when one and a half years have passed since the first medical checkup, but is eligible for a pension prior to age of sixty* due to the worsening of the disease or injury, the degree of disability is determined when a person applied for a Disability Pension.
The amount of disability benefit is determined by the degree of disability. To the persons ranging from the 1st to 3rd degree, benefits are paid in the form of annuities. To those under the 4th degree, benefits are paid as lump-sum amounts. The pension amount is the sum of the DPA and the amount gained by multiplying the BPA (Basic Pension Amount) by the payment rate by the degree of disability. The lump-sum disability benefits paid to the person corresponding to the 4th degree are the amount equivalent to 225% of the BPA.
|Degree of disability||Benefit level|
|1st degree||BPA 100% + DPA|
|2nd degree||BPA 80% + DPA|
|3rd degree||BPA 60% + DPA|
|4rd degree||BPA * 225% (Lump-sum Disability Benefit)|
NPS reviews the degree of disability of the disability pension beneficiaries and, if there is any change in the degree, the amount of the Disability Pension is adjusted accordingly. Further, a Disability Pension beneficiary may request NPS to adjust the Disability Pension amount if his/her disability worsens. If another disability occurs, the Disability Pension is paid on the basis of the degree of the two disabilities combined. If the benefit amount gained by combining the disabilities is less than the former one, the amount of the Disability Pension is not adjusted.
On Receipt of Compensation: When a reason for payment of a Disability Pension is caused by culpability of a third person’s actions, and a compensation for damage has been paid by the third person for the same cause, the Disability Pension is not paid within the limit of the compensation amount.
If an insured person suffers a disability by an intentionally self-inflicted disease, wound or accident, the Disability Pension which is to be paid on the grounds of such a disability may not be paid.
If a beneficiary of the Disability Pension is eligible to receive benefits in accordance with disability compensation under the Labor Standards Act, disability benefits under the Industrial Accident Compensation Insurance Act, or disability compensation under the Seafarers Act or the Fishing Vessels' and Their Crew Members' Accident Compensation Insurance Act, for the same cause that the Disability Pension is paid upon, the beneficiary is paid only half of the disability pension amount.
The Survivor Pension is designed to guarantee the income of survivors, whose livelihoods had been maintained by the deceased, after the death of the insured person. The survivor pension amount consists of the sum of the DPA and 40% to 60% (depending on the insured period) of BPA. The Survivor Pension is not provided if the insured person had not paid contributions with sincerity. Also, it is not paid if the deceased insured person had not made even one contribution at the time of death, or the contribution period is less than 2/3 of the total period during which contributions should have been paid (except for the case where the unpaid period is less than six months).
|Benefit Criteria||Benefit level|
|Insured Period||Benefit Amount|
In the event of the death of the following persons:
- Old-age pension beneficiary
- Insured person (if the person’s insured period is less than one year, limited to death caused by disease or wound originating during the insured period)
- A formerly insured person whose insured period is ten years or more
- Disability pension beneficiary with the 1st or 2nd degree of disability· In the event that a person who was an insured person for less than ten years dies due to a disease, wound or disease from a wound originating during the insured period
|Less than 10 years||BPA 40% + DPA|
|From 10 to less than 20 years||BPA 50% + DPA|
|20 years or longer||BPA 60% + DPA|
The Survivor Pension is paid to surviving dependents whose livelihoods had been maintained by an insured person at the time of his/her death. The eligible survivor comes in the order of the spouse, children, parents, grandchildren, and grandparents who meet the following qualifications:
· Children: under 19 years of age or have a 1st or 2nd degree of disability
· Parents (including the spouse’s parents) : over 60 years of age or have a 1st or 2nd degree of disability
· Grandchildren : under 19 years of age or have a 1st or 2nd degree of disability
·Grandparents (including the spouse’s parents): over 60 years of age or have a 1st or 2nd degree of
※ The age of parents or grandparents eligible for a Survivor Pension is adjusted as follows
If there are two or more survivors having equal priority, the benefit will be paid equally to the survivors. But if the persons having equal priority appoints a representative, the pension will be paid to the representative.
Suspension of Survivor Pension Payments to Spouse
Payment of the Survivor Pension to the spouse is made for three years since acquiring the eligibility and suspended until he/she reaches fifty-five years of age.
However, if the survivor pension beneficiary falls under one of the following conditions, the payment is not suspended.
Income-earning Activities: When a Pension beneficiary has an ‘Income’ exceeding the average of the total insured person’s Standard Monthly Income over the last 3 years prior to the commencement of pension payment, he/she is considered to be engaged in an income-earning activities. The ‘Income’ is calculated by dividing the sum of the Business Income and Earned Income under the Income Tax Act by the number of months worked.
When there is a modification to the survivor pension beneficiary or in the relationship between the beneficiary and the deceased insured person as follows, the pension eligibility expires:
In the case where a reason for payment of a Survivor Pension is caused by an action of a third person, and a compensation for damage has been made by the third person for the same reason, a Survivor Pension is not paid within the limit of the compensation amount.
If a beneficiary of a Survivor Pension is eligible to receive benefits in accordance with survivor compensation under the Labor Standards Act, survivor benefits under the Industrial Accident Compensation Insurance Act, or survivor compensation under the Seafarers Act or the Fishing Vessels' and Their Crew Members' Accident Compensation Insurance Act, with the same cause that the Survivor Pension is paid upon, the beneficiary is paid only half of the survivor pension amount.
A lump-sum refund is payable when a person can no longer be covered under NPS because of age, emigration or death, etc., but has not obtained the qualification for a pension benefit.
When a person who is or was an insured person comes under one of the following conditions, a lump-sum refund is paid:
※ The age for Lump-sum Refund (in the case of 1) is adjusted as follows;
The amount of a Lump-sum Refund is the sum of the contributions paid and interest accrued. The interest rate applied to the insured period is the rate from the involved period, of a time deposit with a maturity of three years, and the interest rate applied to the period after a person lost his/her insured period is the rate from the involved year, of a time deposit with a maturity of one year.
“Pursuant to the amended Enforcement Decree of the National Pension Act, the interest rate for three-year time deposit will be applied from April 16, 2015.”
The interest rate is the average rate of interest at banks of which operations cover the entire nation and which are established under the Banking Act as of January 1 of the corresponding year.
The interest rate of a time deposit with athree-year maturity for 2015: 2.0%
The interest rate of a time deposit with a one-year maturity for 2015: 1.8%
When a person who is or was an insured person dies, but there is no survivor having eligibility for a Survivor Pension or Lump-sum Refund, as referred to in Article 73 of the National Pension Act, a Lump-sum Death Payment is paid as a funeral grant to a broader range of survivors.
When a person who is or was an insured person dies, leaving no survivor eligible for a Survivor Pension or Lump-sum Refund, the Lump-sum Death Payment is paid to a person with the priority in the order of 1. Spouse 2, Children 3, Parents 4, Grandchildren 5, Grandparents 6, Siblings 7, Collateral blood relatives within first cousins, and whose livelihoods were supported by the insured person.
The amount of a Lump-sum Death Payment corresponds to the Lump-sum Refund for a person who is or was an insured person, not exceeding four times the larger amount of either the final Standard Monthly Income of a deceased insured person or the average of the Standard Monthly Income during the insured period. In this case, the Standard Monthly Income is adjusted to the value one year prior to the benefit payment.
When a pensioner has rights to two or more benefits (including a Lump-sum Refund), only one benefit, which he/she selected, is allowed and the other benefits are suspended. However, if the unselected benefit is a Survivor Pension or Lump-sum Refund, a fixed sum is added to the amount of the selected benefit.
If a beneficiary of the Disability Pension or Survivor Pension has eligibility to receive benefits in accordance with disability or survivor compensation under the Labor Standards Act, the Industrial Accident Compensation Insurance Act, the Seafarers Act, or the Fishing Vessels' and Their Crew Members' Accident Compensation Insurance Act, and for the same reason that the Disability Pension or Survivor Pension is paid upon, the beneficiary is paid only half of the Disability Pension or Survivor Pension amount.
Benefits are paid by NPS when a person who has eligibility (beneficiary) applies for the benefits, and they are paid to the beneficiary.
Benefits are paid by NPS when a person who has eligibility (beneficiary) applies for the benefits, and they are paid to the beneficiary.
Payment of benefits will not be given for unjust requests (involving insured person's self-induced disease or injury, or accidents causing such damages, or the insured person's death intentionally induced by his/her survivor or survivors). Furthermore, if the person with the rights to benefits does not submit required documents or other materials, or follow the request of a medical examination, or an order to receive medical treatment without an acceptable reason, payment of all or some of the benefits may be suspended.
When there are some changes in benefit entitlement, on account of death or remarriage of the person entitled to an Old-age Pension, or Disability Pension, or, Survivor Pension, or in relation to benefit amount, such as receipt of compensation benefits under the Industrial Accident Compensation Insurance Act, the beneficiary has to report to NPS about the relevant changes.
The right of pensioners to claim a benefit is legitimate for five years beginning from the initial date of entitlement. Regarding applications after the lapse of the five-year period, benefits except for a lump-sum benefit, are retroactively paid for five years from the date of application.