This study examines the problems of Korea's public pension system by studying how the system is operated, and suggests methods of improvement.
Korea's public pension system was introduced in 1988 and has reached six million subscribers, which requires that system is operated optimally to remain stable. However, all public pension systems including the public official pension, the private school teacher's pension, the military pension and the national pension system are not financially healthy. Most of these pension systems are running, or are expected to run, a deficit in the near future.
The fundamental reason as to why the public pension systems are running a deficit is that pension payments were set excessively high, for contribution payments that subscribers paid during their work period, which resulted in a structural imbalance between supply and demand. The military pension can serve as an example: Compared to the other public pension systems, military pension subscribers pay contributions for a short period and receive pension payment for a relatively long period. In the public pension systems, structural differences and the occupational characteristics of subscribers can cause differences in payment and pension benefits, creating problems about equality between systems and between income brackets.
Therefore, to improve public pension systems, the limit on the age eligible for pension payments should be adjusted, and the structure of the system must to be improved. Specifically, limiting the age eligible for receiving special occupation retirement pension payments is predicted to be the most effective means to resolve the financial issues of public pension systems. This system should be reviewed first. There also should be developed measures to address smaller pension payments provided for military pension subscribers who involuntarily retire due to rank and years of service. In the long term, public pension systems can be operated stably only when their finances remains healthy and equality between the systems is reinforced.
공적연금제도의 문제점 및 개선방향(Challenges of public pension system and direction towards its improvement)
|Series Title; No||정책포럼|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Social Welfare|
|Holding||KDI; KDI School|