"Even if You Earn 5.19 Million Won a Month, Your National Pension Will Not Be Cut"... Restrictions on 'Working Seniors' Lifted

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[The Financial News] The system that reduces National Pension benefits for retirees who reenter the workforce will be significantly relaxed. From the 17th of next month, pension payments will no longer be cut even if monthly earnings are around 5 million won, allowing recipients to receive the full amount.
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According to the Ministry of Health and Welfare (MOHW) and the National Pension Service (NPS) on the 18th, the revised National Pension Act, which eases the reduction standard for old-age pensions based on earned income, will take effect on June 17.
Under the previous rule, if a recipient's income exceeded the average monthly income of all National Pension subscribers over the past three years, known as the A-value, pension payments could be reduced by up to half for as long as five years. This year's A-value is 3.19 million won, meaning that even retirees who found new jobs and earned just 3.2 million won a month could see their pensions cut.
In 2024 alone, about 137,000 people lost a total of 242.9 billion won in pension payments because they had earned labor income. Critics in South Korea and abroad have long argued that this distorted structure, which penalizes work, discourages older adults from staying employed.
The revised law adds an extra deduction of 2 million won to the reduction threshold, easing the burden on older workers.
As a result, this year's new threshold will be 5.19 million won a month, calculated by adding 2 million won to the A-value of 3.19 million won. If monthly income does not exceed that level, recipients can receive 100% of the pension calculated based on the insurance premiums they paid.
Although the official enforcement date is June 17, the practical benefits are already being applied.
The NPS has been applying the revised standard in advance to income earned from January 1 this year. It will also retroactively refund pensions that were reduced because of income earned last year. Those whose income in 2025 was 5.09 million won or less, after adding 2 million won to the A-value, can receive a full refund of the reduced amount after settlement.
However, the exact timing of individual refunds may vary because of the administrative lag before finalized income data from the National Tax Service (NTS) is transferred to the NPS.
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The revision also includes a provision that completely blocks pension payments to so-called 'unworthy heirs' who have lost inheritance rights.
Under the Civil Act, no benefits of any kind, including survivor pensions or lump-sum payments, will be paid to heirs who have committed serious crimes such as murdering family members or who have severely neglected their duty of support. If improper receipt is discovered later, the full amount will be recovered strictly, with additional interest.
The government plans to inject about 535.6 billion won in additional funding over the next five years to create an environment in which older adults can participate in economic activity without worrying about income gaps.
As South Korea enters a super-aged society, the government also plans to carefully review whether to abolish the remaining pension reduction system for high-income brackets, taking into account fiscal conditions and fairness with pensions in other occupational sectors.
sms@fnnews.com Sung Min-seo Reporter