A citizen is seen at a Seoul office of the National Pension Service, Jan. 31. Yonhap

The number of national pension subscribers continues to decline due mainly to the low birthrate and aging population, data from the National Pension Service (NPS) showed Sunday, raising concerns over its sustainability.

In contrast, the number of recipients is increasing, pushing the current national pension system toward a risk of fund depletion. But discussions on ways to make the pension system more sustainable have been delayed.

According to the NPS, the total number of national pension subscribers stood approximately at 21.81 million as of October 2024. This represents a decline of more than 570,000 compared to the end of 2023.

At this rate, the number for 2024 is expected to drop for the second consecutive year following 2023. The decline is also projected to be significantly larger than the drop of approximately 113,000 recorded between 2022 and 2023.

In 1988, when the national pension system was first introduced, the number of subscribers stood at 4.43 million. Although it marked mostly steady growth since then, there were several periods of decline during the system's stabilization process, and a temporary decline was also observed in 2020 due to the COVID-19 pandemic. Those decreases were either short-lived or limited in scale.

Since 2023, however, the decline in subscribers appears to be accelerating due to the impact of the low birthrate.

Even the number of corporate subscribers, which had been increasing steadily, is expected to turn downward for 2024.

National pension subscribers are largely divided into corporate subscribers, which include employers and employees of businesses with at least one worker, and individual subscribers, who do not fall into this category.

In the past, with the expansion of the corporate subscriber category, the number continued to grow. Even during temporary declines in total subscribers, the number of corporate subscribers still saw slight increases.

However, as of October, the number stood approximately at 14.73 million, marking a decrease of about 86,000 compared to 2023.

While the number of people paying pension premiums declines, the number of recipients is increasing rapidly.

As of October, the number of national pension beneficiaries stood at 7.24 million, up 413,000 from the previous year.

The NPS estimates that, under the current system, the pension fund is projected to hit a deficit in 2041 and deplete by 2056.

Despite the need to urgently reform the pension system amid demographic changes, the ruling and opposition parties have failed to reach a consensus, unable to narrow their differences between parametric reform and structural reform.

Parametric reform involves adjusting the contribution rate — the percentage of income paid as pension premiums — and the income replacement rate — the percentage of income received as pension benefits. Since these adjustments can be implemented relatively quickly, they are considered a more immediate solution.

In contrast, structural reform involves redesigning the overall retirement income system by integrating the national pension with other public pensions, such as the basic pension and the retirement pension. This process requires significant time and effort.

The ruling People Power Party (PPP) has argued for a combined approach, advocating for both an increase in the contribution rate and the integration of the national pension with other pensions.

Meanwhile, the main opposition Democratic Party of Korea (DPK) has prioritized parametric reform before considering structural changes.

The only point of agreement between the rival parties last year was raising the contribution rate from the current 9 percent to 13 percent. However, the government and the ruling party repeatedly insisted that structural reform should be pursued simultaneously. As a result, the passage of pension reform legislation was ultimately derailed in the 21st National Assembly, which ended its tenure in May.

Eyes are now on whether pension reform discussions could see rapid progress, with the PPP hinting that it may accept the DPK's demand for parametric reform first.

"If parametric reform is easier to implement, then it should be discussed first," PPP interim leader Kwon Young-se stated at a press conference on Thursday.

"We should first finalize the urgent increase in the contribution rate to 13 percent and decide on the income replacement rate as soon as possible. After that, we can move on to full-scale structural reform."

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Yoon Seok-myung, an honorary research fellow at the Korea Institute for Health and Social Affairs who leads a group of researchers prioritizing fiscal stability, argued that after operating the national pension system for 37 years where retirees receive far more than they contribute, its financial health has deteriorated to the point where painful reforms are unavoidable.

He emphasized that strengthening retirement income security should be achieved through labor market reforms rather than increasing the income replacement rate.

"If the upper limit of the mandatory national pension contribution age is extended by five years from the current 59, the income replacement rate would increase by 5 percentage points," he said. "Adopting Japan's post-retirement reemployment system could provide a threefold benefit — allowing people to work five more years would increase their pension, salary and severance pay simultaneously."