More Koreans opt to receive pension early

More Koreans are applying to receive their state-run pensions before reaching the official age of eligibility.

While the starting age to receive a pension was changed from 62 to 63 amid concerns over the potential depletion of the pension fund, the increasingly high cost of living is driving many Koreans to start receiving their pension earlier.

According to data released by the National Pension Service (NPS) Wednesday, a total of 849,744 individuals in 2023 took their pensions before reaching full retirement age.

The figure was the highest since 1999, when the NPS started allowing early withdrawals from pensions.

The number kept increasing thereafter, recording 323,238 in 2012 and then surging to 765,342 in 2022.

With the accelerated pace of growth, the number of early recipients is likely to hit 960,000 in 2024 and surpass the 1 million mark in 2024, according to the NPS.

It said those who withdrew pensions earlier than the official age last year included the ones born in 1961.

“At age 62, they needed cash urgently but had to wait another year to receive pension [payments] as the starting age was delayed to 63,” the NPS said, explaining why they made such a choice.

“Some others were concerned that they may not live long and judged that it may be better to draw their pensions all at once, while others had trouble in daily expenses,” it added.

When they withdraw money before reaching the official starting age, however, they get less than they were supposed to get. If one receives a pension one year earlier than the official age, for example, it is slashed by 6 percent. A withdrawal that comes five years earlier than the official age means the recipient will receive only 70 percent of what they were supposed to get.

Moreover, as the life expectancy of the average Koreans has been increasing, experts advise that one should refrain from early withdrawal possible.