South Korea's National Pension Service (NPS) has reported a significant decrease in its membership count, with approximately 400,000 fewer subscribers as of July 2024 compared to the end of the previous year.
According to the NPS's latest statistics released on Tuesday, the total number of National Pension subscribers stood at 21,997,622 in July, marking a decline of 394,025 individuals from the 22,384,787 recorded in December 2023.
The decrease was observed across various membership categories. The number of employees covered under company-based plans fell by 26,065 to 14,785,403 in July. Meanwhile, the count of self-employed individuals and other non-company employees, known as "regionally subscribed members," dropped by a more substantial 326,014 to 6,388,100.
Furthermore, the number of individuals who continued paying premiums beyond the mandatory retirement age of 59 to extend their coverage also decreased. These "voluntary continuing members" numbered 493,518 in July, down 4,492 from the previous year.
The slight decline in "voluntary members," who are not required to join the pension system but choose to do so, was also noted, with the number standing at 323,741 in July, 860 fewer than in December 2023.
Experts attribute this decrease in membership to South Korea's rapidly aging population and declining birthrate. The mandatory enrollment age for the National Pension is between 18 and 59, requiring individuals to contribute until they reach 60.
As the large cohort born in 1965, who are now reaching the age of 59, exit the system, they are not being fully replaced by the smaller generation born in 2006 (currently 18 years old). The data reveals that there are 441,564 individuals who turned 18 in 2024, compared to 823,116 who turned 59.
This demographic shift, coupled with other socioeconomic factors, poses challenges to the long-term sustainability of the National Pension system and highlights the need for comprehensive reforms to address the growing pension gap.
[Copyright (c) Global Economic Times. All Rights Reserved.]
