The Three Major Flaws of the Current National Pension System

1. Improvement of the Additional Payment System
Recently, there has been controversy regarding Chinese nationals who join for only one month and then pay a lump sum for 119 months to meet the eligibility requirements before returning completely to their home country.
Not only should the abolition of additional payments for foreigners be a given, but the additional payment system for domestic citizens must also undergo significant restructuring.
The original intent of the additional payment system was to allow those who experienced career interruptions due to unavoidable circumstances—such as military service, marriage, childbirth, or childcare—to pay for those periods as a lump sum to become eligible for benefits. However, since 2010, it has degenerated into a financial investment tool, centered around "Gangnam mothers" with superior information and financial capabilities. As loopholes increased where people pay 200–300 million KRW at once to receive high pension amounts, the government hurriedly limited the additional payment period to 119 months or less in 2021.
Nevertheless, serious side effects persist: people who avoided paying pensions in their youth by dodging payments are now paying for all missed periods in a lump sum just as they reach retirement age. This undermines the efforts of those who faithfully paid monthly for decades and pollutes the benefits and fairness of the system.
In reality, the current additional payment system allows up to 119 months for all gap periods, excluding periods of overseas residence and the exclusion period prior to the first payment month.
The additional payment system, which disregards the essence of the system and devalues the efforts of faithful contributors by allowing people to pay a lump sum right before receiving a pension to secure a lifetime benefit, should be limited only to those with career interruptions due to military service or marriage. In particular, the additional payment system for foreigners must be completely abolished. Reducing the fund losses caused by the abuse of additional payments alone could significantly delay the depletion of the fund.
2. Abolition of the Dependent Pension System
Pension amounts are determined based on the contribution period and the premiums paid during that period. However, when living with a spouse who does not receive a pension, approximately 25,000 KRW is added; for children with severe disabilities or children under 18, and for parents living in the same household who do not receive a pension, approximately 15,000 KRW is added as a family allowance.
The problem is that enormous administrative costs are being wasted to manage recipients who receive these dependent pensions. To verify the eligibility or disqualification of dependents for those receiving an extra 20,000–30,000 KRW, the system involves periodic mailings, telephone encouragement, and even on-site investigations for those unreachable, at least once a year. Consequently, the administrative costs—such as staff travel expenses and postage—exceed the actual amount being paid out.
Abolishing the dependent pension system alone would save a significant amount of funds.
3. Abolition of Benefit Limits for High-Income Pensioners
For the first five years of receiving a pension, individuals with a monthly income (from rental, labor, or business) of approximately 5.2 million KRW or more will have their pension amount reduced by the amount exceeding the standard.
The state intervening to limit the pension that an individual has worked hard to pay into for their entire life, simply because they have a high income capacity, is a contradictory system. It not only raises controversies regarding the infringement of property rights but also directly contradicts the government's slogan of encouraging active employment for the elderly.
Although the income threshold for pension reduction was eased by increasing it by 2 million KRW starting this June,
I believe that the rights acquired through one's own contributions should be fully guaranteed regardless of income.
While there are other irrational systems, the three mentioned above are the most urgent to improve. Rather than causing generational conflict and placing a burden on the younger generation through unnecessary premium increases, I believe a significant portion of pension reform can be achieved simply by improving or abolishing unnecessary and irrational parts within the existing system.
The figures mentioned above may not be exact; if I have misunderstood anything, please point it out in the comments and I will correct it.
Thank you.