This study examines how the introduction of the National Pension System will affect the distribution of income along class lines, and analyzes the current retirement benefit system from the perspective of income redistribution.
The social insurance system in Korea remains loose and decentralized. Instead of the state taking active leadership over the planning and development of a comprehensive social security system in line with the goals of national economic and social development, social insurance programs began to be established in different industries, sectors, and regions in the 1960s in response to the pressing political, economic, and social issues of the day. The current social insurance system in Korea is therefore beset with problems.
First, the current system benefits only a portion of the national population, and fails to reach out to the poor and marginalized who have the greatest need for social security and protection. Second, although businesses that hire 16 or more full-time employees pursuant to the Framework Act on Labor are required to set up retirement funds for employees at employer’s expense, such funds rarely provide any help with respect to old age and death. Moreover, amount of retirement benefits differ greatly from business to business, and from industry to industry, with funds serving merely as short-term unemployment insurance. Third, the regressive tendency of income redistribution is repeated in the funding structure for pension insurances as well. Fourth, Korea’s social insurance system overall is decentralized and complex, failing costs in an effective manner.
Given the problems within the current social insurance and retirement benefit systems, and the possible income-redistributing effect of the pension insurance, we can achieve the desired level of income redistribution with social insurance services only when we make improvements to the retirement benefit system and extend the pension insurance to wage earners outside the public sector. This extension of scope will help promote fairer redistribution income along class lines in the long run.
In order to improve the income-redistributing effects of the pension insurance, we need to apply it to not only employees at large corporations, but to employees of all sectors. Such expansion is warranted, given the increase in the number of people moving to cities in search for jobs as well as the aging of the Korean population.
국민복지연금제도 실시와 소득재분배 효과(National pension system and its income-redistributing effect)
|Journal Title; Vol./Issue||한국개발연구:vol. 3(issue 3)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Social Welfare|
|Holding||KDI; KDI School|