South Korea’s ruling People Power Party (PPP) floor leader Kweon Seong-dong and the main opposition Democratic Party (DP) floor leader Park Chan-dae reached a final agreement on the National Pension reform plan in a meeting hosted by National Assembly Speaker Woo Won-shik on March 20.
The reform bill, which has passed through the Health and Welfare Committee, is set for approval in the National Assembly plenary session this afternoon, marking the first major National Pension reform in 18 years.
The final agreement includes forming a special pension committee with six members from the PPP, six from the DP, and one from other groups. It also outlines raising the national pension contribution rate from 9% to 13% and the income replacement rate from 40% to 43%, starting in 2026. The contribution rate will increase by 0.5% each year for the next eight years.
Before the final signing, Woo called it “a historic moment” for pension reform after 18 years. He added, “Despite tensions over the Constitutional Court’s impeachment trial, many people, including the floor leaders, worked together for days to reach this agreement.”
Earlier, the two parties agreed to include a “consensus-based decision” in the pension reform special committee and expand credits for childbirth. However, disagreements arose over military service credits, leading to further negotiations. Initially, both sides agreed to extend the military service credit from six months to 12 months. But the DP pushed to extend it to 18 months. After more discussions, the final agreement recognized 12 months for childbirth and 12 months for military service as pension contribution periods.
After signing the agreement, Kweon told reporters, “Our party originally wanted to lower the income replacement rate to 40% and raise the insurance rate to 13%, to offer more hope to the younger generation who will bear the pension burden. Since our party is a minority, we had to agree on the 13% insurance rate and 43% income replacement rate. The Democratic Party wanted 45%, and the government suggested 42%, so reaching 43% was a good compromise.”
Kweon also said, “The national pension system must be reviewed every five years. The new pension reform committee will discuss not just demographic changes but also other reform options,” adding, “We will continue to work towards a system that reduces the burden on future generations.”
