This study examines wages and the contribution burden structure by age and income level through consideration of relationship between the role of public pension as social insurance and redistribution, and the stability of pension finance. It also provides analysis of the existing national pension system, and defines the social insurance and income redistribution functions of the national pension and the structural basic factor causing a deficit.
Korea’s current pension system has a considerable structural issue. The current pension system contains factors that cause a long-term structural deficit, and is unbalanced in that the recipient generations at the early stages of the program receive relatively high benefits compared to subsequent generations, in terms of income redistribution. This is due to later generations with higher contribution rates being relatively disadvantaged, since the changes in contribution rates are not reflected in standard monthly wage amount calculations when calculating pension benefits. Also, the existing system cannot accommodate positive income flow from high income groups to low income groups, and a relatively high amount of government subsidy is allocated to low income groups. This burdens the government and causes issues of fairness between high and low income groups.
In order to alleviate the financial burden caused by the deficit of the national pension fund in advance and provide stable management for the pension system, we have developed a series of strategies. First, the pension finance structure should be managed through the elevation of contribution rates, a downward adjustment in calculation method for the basic pension, and a delay of the pension payment starting date. Second, it is necessary to make a reasonable adjustment of the calculation method for the basic pension, so as to equalize the benefits between earlier generations and later generations. Finally, mechanisms to reduce the government subsidy rate to limit unnecessary financial burdens and improve income redistribution effect should be implemented.
It is advisable to begin the reorganization of the pension system through the establishment of a more accurate preliminary plan and financial forecast for the national pension system and publicity as soon as possible.
사회보장지출의 효율성에 관한 연구(Study on efficiency of social welfare expenditure)
국민연금제도를 중심으로(Mainly on national pension system)
|Series Title; No||정책연구시리즈 / 92-11|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < General|
|Holding||KDI; KDI School|