Koreans’ life expectancy has exceeded 83 years, but their retirement age is still in their mid to late 50s. As of 2025, the average monthly receipt of the national pension is only about 670,000 won. In other words, it is not enough to prepare the necessary funds for the retirement period, which lasts more than 20 years on average.

In addition, if the national pension is not received early, it can be received from the age of 63 to 65, which can lead to a sudden cut in fixed income until pension income is generated after retirement. This is called ‘retirement crebas (income cliff).

For stable retirement, it is necessary to design a three-story system that leads to retirement pensions and personal pensions as well as the national pension, which is a public pension. The national pension on the first floor is only a minimum safety net, and if the remaining 2nd and 3rd floors are unstable, the quality of life may fall sharply after retirement. If the retirement pension, which is the second floor, is found as a lump sum, it can be depleted within a few years, so in the end, the last third floor, the personal pension, can determine cash flows such as “monthly pay” after retirement.

One of the representative means of personal pension is pension insurance. You can prepare for longevity risks by receiving a certain amount of money every month while you are alive, and real returns can be improved through tax benefits and welfare effects.

Pension insurance can be classified in various ways, but it can be divided into general pension insurance that is linked to market interest rates and variable insurance that varies depending on the return on investment management such as funds.

Pension insurance does not have a separate tax benefit during the premium payment period, but interest income tax (15.4%) is exempted if the monthly payment is less than 1.5 million won (100 million won for one-time payment) for more than five years and is maintained for more than 10 years. In particular, monthly pension insurance is a strength that cannot be found in other financial products, no matter how large the pension amount received at the start of the pension is, it is not taxed without limits.

Variable pension insurance, which values profitability over stability compared to general pension insurance, can pursue steady profits in the long term through fund investment, and if certain requirements are met, the minimum guarantee pension amount can be guaranteed to pursue stability and growth at the same time. With the recent strong stock market, interest in variable pension insurance is also growing.

Life pension insurance sold only by life insurance companies is the best way to prepare for longevity risk. For a fixed pension, the pension payment is terminated after a set period, but for a life sentence, the pension is paid for life while the subscriber is alive.

The pension is a structure in which the monthly amount of money received decreases as the period of receipt increases, and you can choose the form in consideration of your life expectancy and living cost level before the start. If it is important to have a large pension amount, I recommend a fixed sentence, and if you want to prepare for the risk of longevity, which continues to increase your life expectancy, you are recommended to serve life in prison.

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