This examines the existing national pension system to identify the system’s problems, and causes of the problems, to suggest methods of improvement.
The national pension system was introduced in 1988m and is expected to play a key role in preparing for an aging population. As of the end of 1994, the pension fund amounts to approximately KRW 13 trillion. Although an increase in the pension fund is expected to have significant effects on the capital market, the existing system has several structural problems. In particular, the system has weaknesses in terms of finance and there could be issues related to equality between income brackets and generations in the future, due to demographic changes.
Despite the importance that the pension system holds for the national economy, the existing system is expected to face depletion of funds by the middle of 2030. Although funds will increase for the time being, as the system is operated based on the accumulation method, the funds will decrease significantly, causing a deficit when pension payments begin in the early 2020s.
The reason why long-term financial weakness is expected is that disproportionate salary benefits for pension premiums are guaranteed, which has resulted in a structural imbalance between supply and demand. Moreover, inequality between income brackets and generations cannot be overlooked.
Therefore, means to improve the existing system urgently need to be introduced to recover the balance of the pension finance over the long term, such as adjustment of salary calculations and raising the eligible age for pension payments. The system needs to be improved before pension payments start, because the later the system is improved, the bigger the gap between generations in terms of pension benefits—and the stronger the recipients’ resistance—will be.
국민연금제도의 문제점과 개선과제(Problems of national pension system and tasks for improvement)
|Series Title; No||정책포럼 / 제89호(9517)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Social Welfare|
|Holding||KDI; KDI School|