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Social Development

Korea

: Balancing economic growth and social protection for older adults
  • Korea
  • Lee, Kyonghee; Sung Jooho
  • Geneve, Swiss : The International Association for the Study of Insurance Economics
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Title Korea
Subtitle Balancing economic growth and social protection for older adults
Author Lee, Kyonghee; Sung Jooho
Publisher Geneve, Swiss : The International Association for the Study of Insurance Economics
Publication Date 2013 - 06
Material Type Article
Country South Korea Holding Oxford Academic
Language English License
Pages 18

Abstract

In this paper, the intension is to construct a new Korean defined contribution operation structure that better meets retirement income security by integrating accumulation and payout phases. For this, two approaches are compared: a lump sum withdrawal programme supported by a principal preservation fund (i.e. current approach), and the combination of compulsory annuitisation with lifecycle funds (i.e. alternative approach). We set benchmark incomes, annuity incomes from the immediate life annuity policy, purchasable at retirement with the accumulated assets of lifecycle funds. The above two approaches are then assessed in terms of the probability of shortfall employed here to measure the longevity risk, at a Value-at-Risk of 50, 75 and 95 per cent, respectively. Consequently, it is shown that the alternative approach provides better retirement income security than the current approach.

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