A still-young pension system, spending only 3.8% of GDP, facing the fastest ageing in the OECD: old-age poverty remains the highest among member countries, and the 2025 reform — contributions raised from 9% to 13%, replacement rate lifted to 43% — has only postponed the depletion of the fund.
Key points
- Nearly 40% of Koreans aged 66 and over live below the relative poverty line, the highest rate in the OECD.
- The first parametric reform in 18 years, the 2025 law raises contributions by 0.5 point a year until 2033.
Citoyen synthesis for the Pensions category in South Korea. Grounded in the sector's quantitative data (Ministry of Health and Welfare, National Pension Service, Statistics Korea, OECD). All values are the latest realized observation available — never a forecast; projections are presented as such. Assessments are kept distinct from sourced facts. Data last updated: November 2026.
1. Current situation — where Korean pensions stand
A recent system. The National Pension (run by the NPS) was created only in 1988 and extended to the whole working population in 1999: many of today's retirees contributed for just a few years. On top of it come a tax-funded Basic Pension, paid to the 70% of people aged 65 and over with the lowest incomes — 349,700 won a month for a single person in 2026 —, severance pay and company retirement plans, as well as special schemes for civil servants, the military and teachers.
The lowest spending in the panel. According to the OECD SOCX database, public old-age pensions (cash benefits) amounted to 3.8% of GDP in 2022, and private pensions to 1.2% of GDP. This OECD scope is not Eurostat's (ESSPROS): the two measures must not be confused. Spending is rising fast (3.1% in 2019) as the system matures.
Older people working very late. The average effective age of labour market exit reached 67.4 for men and 69.6 for women in 2024 (OECD), the highest among the countries Citoyen covers. Staying in work is largely a necessity: the statutory company retirement age is 60, while the National Pension is paid only from 63 (64 in 2028, 65 in 2033).
Record old-age poverty. According to the OECD (Pensions at a Glance 2025), 39.7% of older Koreans live below the relative poverty line (50% of median income), the highest rate in the OECD. The national measure, based on the disposable income of people aged 65 and over, is somewhat lower: 35.9% in 2024 (Survey of Household Finances and Living Conditions), down, but 54.9% before public transfers.
A powerful fund. The NPS fund posted a record return of 18.82% in 2025, driven by the Seoul stock market rally, with assets of about 1,458 trillion won at end-2025 (nearly $1 trillion). It stood at about 1,526 trillion won at end-March 2026.
2. Outlook — where pensions are heading
The fastest ageing. Korea became a "super-aged" society at the end of 2024, with more than 20% of its population aged 65 and over (20.3% in 2025 according to World Bank estimates), compared with about 7% in 2000. With a fertility rate of 0.75 children per woman in 2024 (Statistics Korea), the lowest in the world, the number of contributors per retiree will fall rapidly.
The March 2025 reform. Passed by the National Assembly on 20 March 2025, it raises the contribution rate from 9% to 13%, by 0.5 point a year: it rose to 9.5% on 1 January 2026, split equally between employee and employer, and will reach 13% in 2033. The target replacement rate for 40 years of contributions rises from 41.5% to 43% from 2026. The law also enshrines a state guarantee of payment and widens the contribution credits granted for childbirth and military service.
A reprieve, not a solution. In June 2026, the National Assembly Budget Office (NABO) pushed back its projected depletion of the fund by four years, to 2069, thanks to the 2025 returns; the scheme's annual balance would nevertheless turn negative around 2050. These are projections, highly sensitive to the assumed return (4.6% a year). The automatic adjustment mechanism for pensions, considered during the negotiations, was referred to a special Assembly committee on structural reform.
Raising the end-of-career age. The ruling Democratic Party is preparing a gradual rise in the statutory company retirement age from 60 to 65, to close the gap between the end of employment and the pension; according to the press, the option favoured in 2026 would be a one-year rise every two years from 2028, reaching 65 in 2036. Unions want rapid implementation, employers fear the effect on youth employment; the bill had not been passed in early November 2026.
Open questions. (1) Restoring the trust of younger generations, more than half of whom say they doubt the system according to polls from late 2025; (2) reducing old-age poverty without overburdening workers; (3) aligning the end-of-employment age with the pension age.
3. International comparison — Korea among its peers
Set among its peers, Korea combines the lowest pension spending with the latest exits from work, the sign of a system that does not yet fully protect retirees.
Three takeaways. (1) Spending: the lowest. At 3.8% of GDP (OECD SOCX, 2022), Korean public spending is close to Australia's (3.4%), whose public pension is also targeted, but half that of Japan (9.2%) and three and a half times lower than France's (13.4%).
(2) A still-modest private tier. Private pensions (1.2% of GDP) remain far from the English-speaking systems where occupational savings complement a targeted public pension: 4.5% of GDP in Australia, 5.7% in the United States, 3.5% in Canada (2022).
(3) A very late exit. Korean women leave the labour market seven years later than French women (62.4 in 2024) and two years later than Japanese women — a record that also reflects the weakness of pensions.
International comparison — pensions
| Country | Public pensions (% of GDP, OECD SOCX) | Private pensions (% of GDP, SOCX) | Exit age M / F (2024) |
|---|---|---|---|
| Japan | 9.2% (2022) | 2.7% (2021) | 66.9 / 67.4 |
| United States | 7.3% (2023) | 5.7% (2022) | 67.3 / 66.7 |
| Canada | 5.9% (2022) | 3.5% (2022) | 65.2 / 63.2 |
| Australia | 3.4% (2022) | 4.5% (2022) | 64.9 / 64.4 |
| France | 13.4% (2022) | 0.25% (2022) | 61.9 / 62.4 |
| South Korea | 3.8% (2022) | 1.2% (2022) | 67.4 / 69.6 |
Sources: OECD SOCX (old-age cash pensions, public and private, latest year available per country), OECD Pensions at a Glance (effective age of labour market exit). The SOCX scope differs from Eurostat ESSPROS: the French figure in this table is not that of the Eurostat card.
Data used (data-journalism base)
Show the table
| Data | Value | Source |
|---|---|---|
| Public pension spending (old age) | 3.8% of GDP (2022) | OECD SOCX (Citoyen card) |
| Private pensions | 1.2% of GDP (2022) | OECD SOCX (Citoyen card) |
| Effective age of labour market exit | men 67.4 · women 69.6 (2024) | OECD Pensions at a Glance (Citoyen card) |
| National Pension age | 63 (64 in 2028, 65 in 2033) | NPS |
| Contribution rate | 9.5% (2026) → 13% (2033) | Ministry of Health and Welfare |
| Old-age poverty rate | 39.7% (OECD, PaG 2025); 35.9% of 65+ (2024, national measure) | OECD; Statistics Korea |
| Basic Pension (single person) | 349,700 won a month (2026) | Ministry of Health and Welfare |
| NPS fund | ≈ 1,458 trillion won (end-2025); 18.82% return in 2025 | NPS |
Sources (national analyses and references)
Ministry of Health and Welfare (2025 pension reform, 2026 Basic Pension) · National Pension Service (2025 fund return and assets) · National Assembly Budget Office (NABO, June 2026 projections) · Statistics Korea (Survey of Household Finances and Living Conditions, fertility) · OECD (SOCX, Pensions at a Glance 2025) · World Bank · press (Korea Herald, Korea JoongAng Daily, Korea Times, Asia Economy).
Methodological note — the synthesis distinguishes sourced facts from assessments, remains neutral, dates every figure, and does not extrapolate beyond its sources. International comparisons use a single source (OECD SOCX, OECD Pensions at a Glance); NABO projections are presented as projections. Same safeguards as the rest of the observatory.