National Assembly Speaker Woo Won-shik, center, poses with floor leaders of the rival parties — Kweon Seong-dong, left, of the ruling People Power Party, and Park Chan-dae of the main opposition Democratic Party of Korea — during their meeting concerning the pension reform bill at the Assembly in Yeouido, Seoul, Thursday. Yonhap

National pension subscribers will pay 13 percent of their monthly incomes, and receive 43 percent of their average monthly earnings after they retire, under a sweeping reform bill approved by the National Assembly, Thursday.

The bill aims to achieve a goal of "pay more, receive more," which came after years of debate concerning the country's universal pension scheme that policymakers and other stakeholders hesitated to address due to its political sensitivity.

Currently, each working individual contributes 9 percent of their monthly income as premium. Such contribution rate will be hiked to 13 percent. Rate hikes will be made for eight years beginning 2026, with an annual increase of half a percentage point.

The income replacement rate, which determines the amount of pension a subscriber will take in proportion to their pre-retirement income on monthly average, will be raised from the current 40 percent to 43 percent in 2026.

The pension reform is the first in 18 years, and marks the third major overhaul since the pension was formed in 1988.

The pension scheme had faced growing calls for reform, as a demographic crisis, economic slowdown and other downside factors heightened concerns that the state pension fund would be completely depleted by 2055 if countermeasures are not taken. The reform plan is expected to delay depletion of the fund by nine years to 2064.

"The bipartisan agreement marks a historic moment for the pension scheme," National Assembly Speaker Woo Won-shik said concerning the passage of the bill at a plenary session.

The ruling People Power Party (PPP) said the income replacement rate was a contentious issue between the government and the opposition-dominated Assembly, and that parliamentary approval was made possible under the PPP's effort.

"The DPK demanded that the income replacement rate to be hiked to 45 percent, against the government's proposal at 42 percent," PPP floor leader Rep. Kweon Seong-dong said. "And our party is glad to reach the agreement amicably."

Kweon went onto say that the PPP, through the agreement, wanted to "bring hope to younger generations," noting the younger subscribers have a lower possibility of benefiting from the pension system when the fund drains out.

The rival parties said they will "continue to engage in constructive talks to improve the pension scheme in a sustainable manner."

Nearly 74 percent of Koreans aged 18 to 59 are subscribed to the public pension scheme, which had 1,185.2 trillion won ($814.4 billion) in its reserve in the latest data released by the pension fund operator, the National Pension Service.