As Korean society is rapidly aging, the social burden of caring for the elderly is expected to increase. This study aims to examine the importance of personal pension plans as a solution, and suggests measures towards their establishment.
With a decrease in population mortality and the expansion of average life expectancy, Korea is experiencing a rise in its elderly population. Korea should be prepared for an ageing society, as many economically advanced nations are, and consider the introduction of a private pension plan as a means to preserve livelihood after retirement.
There is already a post-retirement social security system, but judging from Korea’s low income replacement levels compared to those in economically advanced nations, the post-retirement social security system is not enough to ensure livelihood after retirement. Furthermore, a corporate pension system has not yet been established and is less beneficial to laborers than to office workers or professionals. For that reason, the corporate pension system is unlikely to be used as a reliable means for retirement income security; rather, it can be used to cover living expenses. The government should actively advocate individually-secured post-retirement income through the expansion of the private pension system.
The introduction of a national pension plan can serve as a solution, but a national pension plan should be able to guarantee an appropriate level of post-retirement income security through systemic and comprehensive planning. In order to maximize the effect of the introduction of a private pension system, appropriate regulations on target subscribers, eligibility, pension service providers, rules for the management of pension assets, and introduction of the legal reserve to ensure the stability and fiscal consolidation of pension assets should be established. In addition, there should be an appropriate tax support system in place, in order to promote saving through the subscription to private pension plans by offering tax credit or graded income tax deductions, while preventing the unequal distribution of tax benefits to high-income households.
As the introduction of private pension plans is expected to suppress increasing consumption after the adoption of the real-name financial system and promote long-term saving, private pension plans should be launched immediately as a follow-up measure to the real-name financial system after a feasibility study. For the minimization of adverse effects, the introduction of private pension plans should be accompanied by the government’s promotion of personal preparation for risk after retirement, long-term subscriptions to private pensions, reinforcement of pension subscription-related systems, an effort to achieve basic goals for post-retirement security, the designation of age 55 or older as the pension age, the possibility for pension subscribers to receive their pension before age 55 after the termination of the premium payment, pension payment to legally eligible recipients after the death of pension subscribers, stable management of the pension management agency, establishment and reinforcement of the management regulations with stability in focus, and equal benefit distribution among income brackets.
개인연금도입의 필요성 및 정책과제(The importance of the introduction of private pension plans and policy tasks)
|Series Title; No||정책포럼 / 제36호(9406)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Social Welfare|
|Holding||KDI; KDI School|