If you receive 600,000 won in the national pension, your basic pension will be reduced by 50,000 won… fair? unfair?

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# Mr. A, who turns 65 at the end of this year, gets angry when he thinks about his basic pension. This is because I heard that the basic pension would be reduced by nearly 70,000 won due to the national pension of 700,000 won per month. It is not convincing that the basic pension that everyone else receives is given less because they have paid the national pension for about 20 years. Mr. A protests, “If you receive a small national pension, you will get a lot of basic pension, and if you get a lot of national pension, if you give it a little, who will pay the national pension.”

A basic pension that pays up to 300,000 won per month to seniors 65 years of age or older with the bottom 70% of their income. The biggest dissatisfaction with this system is the reduction system linked to the national pension system. The more the national pension is received, the less basic pension is given. In general, the longer the national pension payment period, the less basic pension will come out. It is a significant difference from the perspective of retirees who are disappointed with a penny.

“I don’t cut the pension for banks and insurance companies, but why do I only have the national pension?”

There are three cases of not receiving 100% of the basic pension. First of all, if a couple picks up together, a 20% reduction will be applied to the couple’s total amount of 480,000 won. There is also a device to prevent the reversal of income between the elderly who receive basic pension and those who do not. As of this year, the recognized income must be 1.69 million won or less to be eligible for the basic pension. A person with a recognized income of 1.6 million won will only pay 90,000 won so that a person with a recognized income of 1.7 million won will not be unfair.

The third is the reduction system linked to the national pension. As of this year, if the national pension receipt is 450,000 won or more and the A benefit amount is 225,000 won or more among the national pensions, it is subject to a reduction in the basic pension.

Most of them are well aware of the amount of national pension they receive, but they do not know the amount of A benefits. The national pension consists of A benefit amount and B benefit amount. A benefit amount is an item that measures the average income of all subscribers, and it is in charge of redistributing the income of the national pension. Benefit B is proportional to the member’s income. In other words, the social security function is contained in the A benefit, and the B benefit is returned as much as you pay, just like a general pension product. The reason why subscribers who paid less in the national pension benefit more from the refund rate is because of the A benefit.

Pension products such as pension savings and pension insurance that are subscribed to by banks or insurance companies do not have a linked reduction system, but this is the reason that the basic pension is given less based on the amount received from the national pension. Since you are enjoying more benefits from the national pension than others, the benefits of the basic pension can be said to mean giving up to others. The purpose of this system is that those who receive income redistribution benefits through the National Pension A benefit are rather fair to give less benefits from the basic pension.

The basic pension is reduced by 70,000 won from the national pension of 700,000 won… 80,000 won for 800,000 won

If you know your national pension monthly receipt and A benefit amount, you can easily calculate how much your basic pension will be reduced.

Let’s take a case where the national pension is received at a rate of 600,000 won per month, of which A salary is 30,1200 won. First of all, 150,000 won, which is 250% of the basic pension amount of 300,000 won, or 750,000 won, minus 600,000 won for the national pension, becomes the primary pension amount. In addition, if 150% of the basic pension amount, or 450,000 won, is subtracted from two-thirds of A salary, 200,000,900 won, 249,100 won becomes the secondary pension. The larger of the first and second pensions, 249,100 won, is the final basic pension amount. As they received 600,000 won in national pension, 59,000 won in basic pension was reduced. Here, if there is a reduction in the couple’s reduction or the income reversal prevention reduction, the amount can be further reduced.

Taking into account the average subscription period for each national pension amount, if you receive a national pension of 500,000 won, your basic pension will be reduced by 30,000 won, 50,000 won for 600,000 won, 67,000 won for 700,000 won, 79,000 won for 800,000 won, and 900,000 won. It is reduced by 92,000 won and 97,000 won to 1 million won.

A salary is proportional to the subscription period. Initially, the basic pension-linked reduction system was a method of paying the full amount of the basic pension for 11 years or less of the national pension enrollment period, and 10,000 won per year when the enrollment period exceeded 12 years. Even if you are currently receiving the same amount of national pension, the subscription period and payment amount may be different, and accordingly, the amount of reduction in the basic pension may vary.

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“If you say less basic pension, who will join the national pension?”

“Reducing the basic pension is a deceptive act of the national pension subscribers, and is a classic of reverse discrimination. If you find out, you don’t think the government has been deceitful against the people. It makes a person who faithfully pays the national pension into a fool.”

This is part of an article posted in the Blue House National Petition last year. As such, there is a strong backlash from national pension subscribers to the cuts in the basic pension.

The biggest problem is that it lowers the incentives to join the national pension and raises distrust. The national pension is compulsory. There is no way to avoid reductions in the basic pension because the amount paid by employees is also fixed. It is also unfortunate that the national pension is taken from the monthly salary bankbook.

According to the independent lawmaker Lee Yong-ho, the number of beneficiaries whose basic pension was reduced due to the national pension reached 363,000 as of June last year. Among those who receive both the basic pension and the national pension at the same time, 15.8% are suffering from the disadvantage of reducing the basic pension. With the maturity of the national pension system and the number of long-term national pension subscribers among the elderly, the number of targets for the reduction of the basic pension increased by 61.8% in the four years from 22,4307 in 2016 to 362,908 in June last year. The average cut amount also increased by 25.0% from 55,203 won in 2016 to 689.92 million won last year.

Rep. Lee Yong-ho said, “People who are eligible for reduction are also at the bottom 70% of their income and are not rich. The linked reduction system is consequently stealing the benefits of the common people who earnestly paid the national pension.” The younger generation who are worried about the problem is wondering whether they will try to pay the national pension.”

The problem is also the budget. The National Assembly Budget Office predicts that an additional annual average of 60.3 billion won will be spent until 2030 if the system for reducing private pensions is abolished. In particular, as the number of targets for the basic reduction linked to the national pension will increase from the current level of 360,000 to 740,000 in 2030, the required budget is expected to increase from 4119 billion won this year to 795 billion won in 2030.

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