Rising National Pension Exemptions: Growing Trend of Avoiding Premiums Despite F

It has been revealed that a significant number of National Pension subscribers are still not paying their premiums despite having the financial means to do so.

There are concerns that such behavior could create a sense of relative deprivation among those who faithfully pay their premiums.

According to data on “premium exemption status” submitted by the National Pension Service (NPS) to the National Assembly’s Health and Welfare Committee through Representative Kim Sun-min’s office, as of June 2024, 2.86 million National Pension subscribers were classified as “premium-exempt,” meaning they do not pay premiums.

Among these exempted individuals, some appear to have a certain level of economic capacity, as suggested by indicators such as owning high-end vehicles or frequent overseas trips.

For instance, among 2,785 premium-exempt individuals who own imported vehicles and pay high automobile taxes, more than half—1,683—were confirmed to own imported cars.

Under the current National Pension Act, workplace or regional subscribers are granted exemption status and exempted from the obligation to pay premiums if they have no income.

However, the NPS recommends that premium-exempt individuals who are presumed to have financial capacity verify and report their income.

An NPS official stated, “If there is no taxable income data, we cannot enforce payment, but those who appear financially capable are being advised to resume their contributions.”

Nevertheless, it is acknowledged that actual sanctions are difficult to enforce, as individuals can remain in exempt status if they choose not to resume contributions.

The exemption from premium payments is not just a current issue but could also severely impact income security in old age.

To qualify for the old-age pension from the National Pension, one needs a minimum subscription period of 10 years, but periods without premium payments are not counted as part of the subscription period.

Therefore, those who later acquire income are encouraged to use the retroactive payment system, which allows them to pay past-due premiums to count towards their subscription period.

Amid concerns over an expanding old-age income gap due to premium exemptions, the NPS is committed to continuous management efforts to broaden the pension coverage for the public.

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Rising National Pension Exemptions: Growing Trend of Avoiding Premiums Despite Financial Capacity