Kim Dong-woo (61), who is entitled to receiving national pension from next year, is agonizing whether he will delay his pension receipt as long as allowed. He could use “deferral of pension receipt” in which delays in the starting time of his pension receipt adds to interest and increases the amount of his pension. Kim can receive an estimated 1.1 million won (940 U.S. dollars) per month according to the original pension schedule, but if he postpones pension receipt by five years, a 36 percent interest will be added to his pension, which will increase his monthly pension to 1.49 million won (1,270 dollars).
Like Kim, a growing number of people are choosing to wait before starting to receive their pensions and thus applying to delay pension receipt and to be paid more pension in return. As the average life expectancy has increased and more people in advanced ages are engaged in economic activities, more would-be pensioners are judging that it is more advantageous to delay pension receipt.
According to the National Pension Service on Sunday, a total of 3,730 people applied for delays in pension receipt through February this year. The number of people who applied for deferral of pension receipt surged from 1,075 in 2010, to 14,871 in 2015 and to 22,139 in 2017.
Deferral of pension receipt allows people to delay the timing of their first pension receipt by up to five years, which adds an annual interest of 7.2 percent (0.6 percent per month) to their pensions. It means that a five-year delay in pension receipt will add a combined total of 36 percent in interest, thereby increasing the total amount of pensions they will receive.
Sung-Min Park email@example.com