National Pension Reform: (1) What Is Parametric Reform? (2) What Is Credit Expansion?

Key points of the 2025 National Pension reform

< 2 of the 4 Key Points >
1. Parametric reform
Contribution rate: raised from 9% → 13%
(raised gradually by 0.5%p every year for 8 years starting in 2026)
However, employees will pay 6.5% instead of the 4.5% they used to pay.
Income replacement rate: raised immediately to 43% from 2026
Current income replacement rate: 41.5% in 2025, 41% in 2026 (was scheduled to reach 40% in 2028)
< Simple Explanation >
A higher contribution rate means a larger share of your monthly salary goes to the National Pension.
For example, a person earning 3,000,000 won a month currently pays 270,000 won (9%), but will pay 390,000 won (13%) in 2033.
However, half of this is paid by the company. Locally insured persons pay the full amount themselves.
But this increase will not happen all at once; it will rise little by little over 8 years.
A higher income replacement rate means the pension you receive later will be larger.
For example, if a person whose lifetime average monthly salary was 3,000,000 won has been enrolled for 40 years,
they would receive 1,200,000 won a month under the current 40% standard, but 1,290,000 won a month under the 43% standard.

2. Credit expansion
Childbirth credit: now also recognized for the first child, expanded to 12 months, 50-month cap abolished
Military service credit: expanded from 6 months → up to 12 months
< Simple Explanation >
The childbirth credit is a system that, when you have a child, recognizes a period as pension enrollment even if you did not actually pay contributions.
Previously, it was not granted for the first child, but now the first child is also recognized for 12 months (1 year).
Also, previously, no matter how many children you had, only up to 50 months were recognized, but now that limit is removed.
For example, if you had 5 children, previously only 50 months were recognized,
but now all 60 months (5 years) can be recognized.
The military service credit is a system that recognizes additional pension enrollment periods for people who have completed military service.
Previously only 6 months were recognized, but now up to 12 months (1 year) can be recognized.
As a result, people who have completed military service will receive about 5,900,000 won (in total) more in pension later.

I'll explain the rest in the next part~ Nobody likes reading long posts, right?