South Korea’s rival political parties reached a consensus on pension reform on Mar. 14, with the main opposition Democratic Party (DP) agreeing to the ruling People Power Party (PPP)’s proposal to raise the nominal income replacement rate to 43%.
“The DP will accept the 43% income replacement rate that the PPP and the government have been advocating,” DP officials said. The PPP welcomed the decision, marking a concession by the opposition, which had previously pushed for a 44% rate while the ruling party stood firm at 43%.
Both parties aim to advance the reform through the National Assembly’s Health and Welfare Committee as early as next week. The measure, the first major adjustment in 18 years, will increase the pension contribution rate from 9% to 13% while raising the income replacement rate from 40% to 43%. Experts estimate that if enacted, the reform would extend the National Pension Fund’s depletion date from 2055 to 2064. However, political developments, including the pending Constitutional Court ruling on President Yoon Suk-yeol’s impeachment, could affect the bill’s passage timeline.
Jin Sung-joon, the DP’s policy committee chief, said the decision followed internal discussions led by DP Chairman Lee Jae-myung. He emphasized that the party’s acceptance of the 43% rate was contingent on three conditions: the government must explicitly guarantee pension payments, expand credits for childbirth and military service, and enhance financial support for low-income earners. Pension credits acknowledge socially valuable activities by adding qualifying years to an individual’s pension contributions.
Kim Sang-hoon, the PPP’s policy committee chief, said in a National Assembly briefing that his party welcomed the opposition’s stance. He noted that the three conditions proposed by the DP were not new and were already part of the government’s plan. “We will coordinate with the government to reach a reasonable decision,” he said. The two parties had previously agreed to implement parametric reforms first, with structural reforms to follow at a later stage.
Park Ju-min, a DP lawmaker and chair of the Health and Welfare Committee, expressed confidence that the reform bill could pass the National Assembly’s plenary session as early as next week. “We have reached a broad consensus, and while some final adjustments to figures remain, moving quickly is the right approach,” he said.
Despite agreeing on key parameters, the two parties remain divided over structural reforms, particularly the introduction of an automatic adjustment mechanism. Jin reaffirmed the DP’s opposition to such a system, even if it required parliamentary approval. The PPP, however, maintains that an automatic adjustment mechanism is necessary to allow pension contribution and income replacement rates to be revised in response to demographic and economic shifts. The government and ruling party said discussions on structural reforms should continue within a special committee on pension reform, which is expected to be established at a later date.
