I was soaking a few strands of saffron in warm water and washing rice when I got a call from my mother in Korea. The first thing she said was, "What are you going to do about the National Pension?"

She mentioned that she saw the news about the changes to the National Pension starting this year. Honestly, I only had a vague idea, so I looked it up while the rice was cooking.

First, the big picture. The amendment to the National Pension Act passed the National Assembly on March 20, 2025, and will take effect on January 1, 2026.

The most noticeable change is the insurance premium rate. The rate, which has been at 9%, will increase to 9.5% in 2026, and will rise by 0.5 percentage points each year until it reaches 13% in 2033.

The benefits have also changed. Originally, the income replacement rate was set to decrease from 41.5% in 2025 to 40% by 2028.

However, due to this reform, it will jump to 43% starting in 2026. You can think of it as paying more and receiving a bit more in return.

But there's a catch. According to the National Pension Service, the increased 43% will only apply to the periods of contribution after January 1, 2026.

They have clearly stated that the new income replacement rate will not apply to those already receiving pensions. So, if you are already receiving your Korean pension while living in the U.S., this reform won't suddenly increase your amount.

Additionally, the law now explicitly states that the government guarantees pension payments. The maternity credit and military service credit have also been expanded.

The maternity credit will now be recognized starting from the first child, and the military service credit will be acknowledged for a longer period than the previous six months. If you served in the military in Korea, this is something to consider when calculating your future benefits.

Now, let's summarize from the perspective of someone living in the U.S. It's easier to break it down into three categories since everyone's situation is different.

The first category is those who maintain their Korean nationality and continue to pay premiums as voluntary contributors while living abroad. This group will be most directly affected by the reform.

Employees share the premium with their companies, but voluntary contributors pay the entire amount themselves. So, the increase to 9.5% this year and 10% next year will be fully their responsibility.

However, the periods contributed after 2026 will be calculated based on the 43% rate. If you are a voluntary contributor trying to meet the minimum contribution period of 10 years, now is the time to reassess the pros and cons.

The second category is those who worked in Korea for a few years and are no longer contributing. These individuals are not affected by the premium increase, and the amount they receive will mostly be based on their contribution period before 2025, so not much will change for them.

What they should consider is the refund of the lump-sum payment. If they have lost their nationality or moved abroad, they can receive a refund of their contributions with interest.

Be aware of the claim deadline. The statute of limitations for the lump-sum refund has been extended from 5 years to 10 years since January 2018.

Thanks to the Korea-U.S. Social Security Agreement, U.S. citizens can receive lump-sum payments under the same conditions as Korean nationals. Many people forget about this after obtaining citizenship.

The third category includes those who have contribution periods in both Korea and the U.S. Under the Korea-U.S. Social Security Agreement that took effect in April 2001, you can combine the contribution periods from both countries to qualify for benefits.

For example, if you don't have enough time based on Korean contributions alone and also fall short with U.S. credits, you can combine them to meet the qualification. Those living in the U.S. can file claims through their local Social Security office, as indicated by the consulate.

There's one more piece of good news. The WEP provision, which reduced U.S. Social Security benefits for those receiving foreign pensions, was abolished by the Social Security Fairness Act in January 2025.

Previously, many were worried that receiving a Korean pension would reduce their U.S. benefits, but that concern is now gone. However, how to handle the Korean pension when filing U.S. taxes is a separate issue.

Whether to receive a lump-sum payment or to combine it into a pension will depend on age, nationality, contribution periods, and tax issues. Since it varies by individual circumstances, be sure to check with the International Cooperation Office of the National Pension Service or a tax professional.

As I was researching, I thought about this. Most Korean news is based on the perspective of people receiving salaries in Korea, so the stories about us living abroad often end up being just a line.

Looking at the numbers, a 4 percentage point increase in premiums feels quite significant. Still, compared to just hearing that finances are running low, we have to acknowledge that they are at least trying to make some changes.

If I were you, I would first check my contribution history on the National Pension Service website. It's the most inefficient to worry without knowing how many months I've contributed.

Then, I can decide whether to continue as a voluntary contributor, take the lump-sum payment, or aim for combining the periods. I told my mother the same thing.

After the call, I noticed that the rice had turned a nice yellow color. Just like saffron, pensions take time to steep, so it seems that those who prepare in advance ultimately win the game.