National Pension Insurance Premium Adjustment Details for July 2025 – Structure and Significance of Premium Adjustments Focused on High-Income Earners

National Pension, premium adjustment, high-income earners impact

Introduction

Every July is an important time for National Pension subscribers. This is because the 'standard monthly income,' which serves as the basis for calculating the pension premiums, is regularly adjusted. Particularly this year, a structural adjustment has been made where the premiums differ based on income brackets, resulting in some high-income subscribers facing an increase of up to 18,000 won in their premiums. These changes affect not only high-income earners but also middle and low-income individuals in different ways. While most subscribers will see no change in their premiums, it is crucial to understand the causes and structure of these changes. This essay will comprehensively examine the adjustments to the standard monthly income that will take effect from July 2025, the resulting changes in premiums, the impact by subscriber income brackets, and the overall purpose and significance of the system. We will provide a clear overview from institutional background to practical burden, helping all National Pension subscribers to check and prepare for what applies to them.

National Pension Overview, Standard Monthly Income, Adjustment Background

Overview of the system and background of adjustments

The National Pension is a representative public pension system designed to guarantee citizens' income in retirement. The core of this system is that premiums are assessed based on the 'standard monthly income' calculated from the member's monthly income, which subsequently determines the pension amount received. The standard monthly income does not reflect the entirety of an individual's actual income but is defined as an official figure for premium calculation within a certain range. According to the Enforcement Decree of the National Pension Act, the upper and lower limits of the standard monthly income are automatically adjusted every year on July 1, reflecting the average increase rate of monthly income for all members over the last three years. This system was introduced in 2010, and prior to that, the standard monthly income had been fixed for a long time, leading to criticisms that it did not reflect the actual value of pension benefits. In the adjustment for 2025, the average income increase rate of 3.3% over the last three years was applied, resulting in an upward adjustment of both the upper and lower limits. These adjustments are measures to maintain the connection between pension premiums and benefits in accordance with income growth, as well as to enhance the stability and sustainability of the National Pension's finances.

premium adjustment, change in standard monthly income, fixed premium rate

Adjustment details for July 2025

The standard monthly income upper and lower limits applicable from July 1, 2025, to June 30, 2026, will be changed as follows. The upper limit will be increased from 6.17 million won to 6.37 million won, and the lower limit will be raised from 390,000 won to 400,000 won. This adjustment is made by changing the standard monthly income itself to which the insurance premium rate is applied, rather than adjusting the premium rate. The National Pension insurance premium rate remains fixed at 9%, which is shared equally between the employer and the employee at 4.5% each for employees, while local subscribers bear the full amount themselves. Therefore, this adjustment will result in an increased insurance premium burden for high-income earners due to the upper limit increase and will also lead to a slight increase in premiums for low-income subscribers subject to the lower limit. On the other hand, most subscribers in the middle range will not experience any change in premiums.

Interval Impact Analysis

The group most affected by this adjustment for high-income earners is those whose monthly income exceeds the upper limit of the standard monthly income. Previously, regardless of how high the income was, the premium was charged only up to the upper limit of 6.17 million won, but now this limit has been raised to 6.37 million won. As a result, the premium has changed from 6.17 million won × 9% = 555,300 won to 6.37 million won × 9% = 573,300 won, leading to a maximum increase of 18,000 won per month. For workplace subscribers, half of this increase, which is 9,000 won, will be borne by the individual, while the other half will be covered by the employer. However, in the case of local subscribers, they will have to bear the entire increase, which may feel like a greater financial burden. For middle-income earners, there are changes for some subscribers whose income is below the upper limit but exceeds the previous upper limit of 6.17 million won. For example, if monthly income is 6.3 million won, previously the standard monthly income was fixed at 6.17 million won, resulting in a premium of 555,300 won. However, after the adjustment, the premium will be calculated based on the actual income of 6.3 million won, resulting in a slight increase to approximately 567,000 won. This change is a result of the upward adjustment of the standard monthly income limit, which has expanded the range in which their actual income is reflected. Since the premium rate itself remains unchanged, it is not a sudden increase in burden, but a minor adjustment effect occurs. The impact of the adjustment for low-income earners mainly affects very small self-employed individuals, daily wage workers, and precarious laborers. Previously, the lower limit for the standard monthly income was 390,000 won, which resulted in a premium of 35,100 won. With this adjustment, the lower limit has been raised to 400,000 won, resulting in a maximum increase of 900 won for the premium, which is now set at 36,000 won. This measure is interpreted as essential for maintaining the minimum premium rate to secure pension benefits. Although it is a small increase from the perspective of subscribers, it is significant in the long term, as it may lead to an increase in pension benefits. Most subscribers to the National Pension who are unaffected by this adjustment are not impacted. Specifically, a large number of subscribers whose standard monthly income falls between 400,000 won and 6.17 million won are excluded from the adjustments to the upper and lower limits. Since both the premium rate and the standard monthly income remain unchanged for this group, there is no change in the premiums they pay.

Difference in Burden by Membership Type

The burden structure of the national pension insurance fee shows distinct differences depending on the type of membership. In the case of workplace members, half of the insurance premium is borne by the employer, while the individual covers the remaining half. On the other hand, local subscribers bear the full amount of the premium themselves. As a result of this adjustment, high-income local subscribers will experience an increase of 18,000 won per month in their insurance premium, which they must bear entirely, leading to a greater perceived burden compared to workplace members. Consequently, there are discussions regarding the equity of burden between local and workplace subscribers, and some experts point out the need for institutional improvements to enhance the fairness of the insurance premium burden.

Institutional Interpretation and Meaning

This adjustment is not simply an increase in insurance premiums, but a regular measure for the structural reliability and sustainability of the National Pension. The annual adjustment of the upper and lower limits of the standard monthly income ensures that the pension benefits maintain their real value according to the rise in prices and incomes, playing a crucial role in guaranteeing the quality of life for pension recipients. Furthermore, although the insurance premiums will rise with the increase in the standard monthly income, in the long term, the ‘A value’ reflected during pension receipt and the reassessed income amount will increase, resulting in higher pension benefits. Therefore, it is necessary to interpret this positively in terms of securing pension rights and long-term returns, rather than focusing only on the short-term increase in burden.

 

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