▲ Sohn Kyung-shik, chairman of the Korea Enterprises Federation, speaks at the 1st ESG Management Committee meeting for 2026 held at the Korea Press Center in Seoul on May 13.
The business community has suggested that the equity between a subscriber's contributions and benefits needs to be strengthened to enhance public acceptance of the National Pension scheme.
In a report titled "Innovative Measures for the National Pension Scheme to Enhance Public Trust" released today (Sept. 2), the Korea Enterprises Federation (KEF) proposed five major innovation plans: ▲ introducing an automatic adjustment device, ▲ improving the insurance collection system for regional subscribers, ▲ abolishing or easing reduction systems, ▲ redesigning the benefit system, and ▲ reorganizing fund management governance.
The KEF emphasized that when determining the annual increase in pension benefits, an automatic adjustment device should be introduced to reflect demographic and economic variables such as rising life expectancy and a declining number of subscribers, alongside the inflation rate.
Regarding the insurance premium imposition and collection system, the organization pointed out that regional subscribers must report their incomes directly, leading to issues with underreporting or non-payment.
In fact, the average collection rate for regional subscribers from 2023 to 2025 stood at 89.94%, which was lower than that of workplace subscribers (99.43%).
The KEF proposed a "hybrid collection system" that maintains the current principle of declared income while strengthening linkage and verification with National Tax Service taxation data, and promptly adjusting the standard monthly income if there is a significant discrepancy between the declared income and verified income.
Regarding the old-age pension reduction system for working beneficiaries and the overlapping benefit reduction system for old-age and survivor pensions, the KEF stated, "As they fail to fully reflect changing socio-economic conditions and subscribers' lifetime contributions, related reduction systems should be abolished or significantly eased."
It also proposed restructuring the benefit structure.
Citing the Organisation for Economic Co-operation and Development (OECD) model, the KEF noted that while the National Pension income replacement rate for individuals earning 0.5 times the average income reaches 50.6%, it remains at a mere 20.2% for high-income earners making twice the average income.
Accordingly, the organization emphasized that the current 50-50 proportion between the flat-rate benefit and the earnings-related benefit should be adjusted by reducing the flat-rate portion and increasing the earnings-related portion to strengthen the link between contributions and benefits.
Regarding fund management governance, the KEF stated that it should be reorganized into a permanent body centered on investment and financial experts to strengthen professionalism and independence.
Lee Sang-cheol, head of the Employment and Social Policy Division at the KEF, said, "The low level of trust in the National Pension despite parametric reforms indicates the need to reexamine the basic principles and operational framework of the system as a whole. We must improve the system to enhance intergenerational equity in burdens and ensure that subscribers' contributions are fairly reflected in their benefits."
(Photo: Yonhap News)
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