South Korea Considers Tightening National Pension Catch-Up Payments to Prevent ‘Pension Investing’

South Korea is reviewing the National Pension’s retroactive payment system after controversy over foreign nationals using it to make lump-sum contributions and qualify for lifelong pension benefits.

The Health and Welfare Ministry said it is examining reforms that would also apply to South Korean citizens. One proposal would link the period eligible for retroactive payment to the period in which a person actually paid contributions. Another would allow such payments only after a person had remained enrolled in the National Pension for a specified minimum period.

The system currently allows people who could not pay contributions during periods of leave, unemployment or business suspension to pay those premiums retroactively for as many as 119 months. Making the delayed payments can extend the person’s contribution record and help meet the requirements for receiving a pension.

Critics say that this arrangement conflicts with the principles of social insurance because people can increase their coverage period by paying premiums long after the original period. The government has already restricted foreign nationals to retroactive payments for periods when they actually lived in South Korea. It is now considering whether similar structural changes should apply more broadly.