“So dual-income couples who diligently paid into the National Pension are the ones who lose out?” ... Fairness debate over survivors’ pensions

[Financial News] A fairness debate has emerged over survivors’ pensions, which are paid to family members left behind when one spouse dies.

Under the current system, if both spouses receive the National Pension and one dies first, the surviving spouse can receive only 30% of the deceased spouse’s survivors’ pension in addition to their own old-age pension. The same applies to couples receiving the same occupational pension, such as the Public Officials Pension, Military Pension or Teachers’ Pension. If one spouse dies, the survivors’ pension paid to the other is reduced by 50%. This so-called “adjustment of overlapping benefits” is intended to prevent public pension benefits from being excessively concentrated in one person’s hands.

The situation is different, however, when one spouse is enrolled in the National Pension and the other in the Public Officials Pension. Even if one spouse dies first, the surviving spouse can receive both their own pension and the deceased spouse’s survivors’ pension without any reduction. That is because the rules for adjusting overlapping benefits that apply to couples enrolled in the same public pension system do not apply to couples enrolled in different systems. As a result, even dual-income couples who paid contributions throughout their lives can see a major difference in the amount of survivors’ pension they receive, depending on which pension systems they joined.
According to the National Pension Service (NPS) on the 30th, Yoo Hyun-kyung, a specialist researcher, and Lee Ye-in, a research associate at the National Pension Research Institute, recently highlighted fairness concerns in the system for adjusting overlapping survivors’ pension benefits and called for improvements in a report published in Pension Forum, titled “Adjustment of Overlapping Survivors’ Pension Benefits between Occupational Pensions and the National Pension: A Review of International Cases.”
Major countries overseas adjust survivors’ pension payments when benefits overlap, even when the recipients are covered by different public pension systems, such as the National Pension and the Public Officials Pension.
In Germany, if the deceased spouse was enrolled in a public pension scheme, the surviving spouse’s income is examined closely. If they earn or receive pension income above a set threshold, 40% of the excess is deducted from the survivors’ pension before it is paid. When a former public official dies, the survivors’ pension is also reduced by the amount that pushes the combined total of the surviving spouse’s pension and the survivors’ pension above a specified cap.
France, by contrast, is an exception. This is because it regards public officials’ survivors’ pensions as a right to property that the couple jointly built up during their marriage. Critics say it is unfair to reduce ordinary workers’ survivors’ pensions according to income while making an exception only for public officials’ survivors’ pensions.

The researchers cited a recent case in which an amendment to the Military Pension Act addressed the issue of adjusting overlapping survivors’ pension benefits between military personnel and post office employees. They stressed that consistent and equitable adjustment criteria should also be established for the National Pension and the Public Officials Pension.
They recommended first building social consensus on whether survivors’ pensions should be viewed as social security benefits to ensure the livelihood of surviving family members or recognized as property rights jointly built up by a couple. The researchers said that, based on this discussion, the system should minimize disparities between pension schemes and establish reasonable principles for adjusting overlapping benefits that the public can accept.
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