The ruling and opposition parties have reached a final agreement on a pension reform plan that will mark the first major adjustment of the nation’s pension system in 18 years.

Floor leaders Kweon Seong-dong of the ruling People Power Party and Park Chan-dae of the main opposition Democratic Party signed the deal at a meeting presided over by National Assembly Speaker Woo Won-shik on Thursday.

The plan involves increasing the pension contribution rate from nine percent to 13 percent and raising the nominal income replacement rate to 43 percent from 40 percent.

The two sides also agreed to expand pension credits for military service from six months to 12 months. 

Parents will get 12 months’ worth of pension credits for their first child, 12 months’ worth for their second child, and 18 months’ worth for each subsequent child, with a 50-month ceiling erased. 

Previously, pension credits were given to parents beginning with their second child. 

The issue of structural reform will be discussed later by a special parliamentary pension reform committee headed by the ruling party and composed of six representatives of the ruling camp, six from the main opposition party and one from a non-negotiation group.

The National Assembly will vote on the agreement at a plenary session scheduled later in the day.