This study examines the financial health of the existing national pension system and identifies problems and their causes, so as to suggest specific methods to improve the system.
Since its introduction in 1988, Korea's national pension system has become a pivotal part of the social security system. The national pension system is expected to play a key role in social insurance programs to guarantee income later in life. The system is also predicted to have an increasing impact on the national economy. However, the existing pension system's mid- and long-term finance is unsound. Its structure also exhibits problems in terms of balance between supply and demand, as well as equality. Therefore, there is a need to improve the system so that it can have maintained a balance between social insurance and income redistribution.
The system's structure needs to be strengthened in such a way that it maintains a long-term balance of finances, and ensures individuals in the low-income bracket receive increased pension benefits. Korea should take measures to keep the pension finance healthy in the long term by adjusting the rate of insurance, changing the way pension payments are calculated, and adjusting the eligible age for receiving pension benefits. Additionally, the gap between generations in terms of benefits received needs to be eliminated, and excessive aid for recipients in the high-income bracket should be reduced.
This study's analysis shows reducing pension payments are more efficient than increasing revenues by raising insurance premiums. Also, there is a need to improve the method by which income is estimated, as the national pension system is being expanded to farming and fishing villages, and the existing lump sum refund is abolished.
Once pension payment begins, adjustments in pension payment or additional raises of pension premiums will cause resistance from subscribers and payment recipients. There will also be legal and political challenges when the adjustment is made. Furthermore, the later improvement is made, the worse the generational equality will be.
Therefore, the government should take actions to strengthen the system as soon as possible.
국민연금제도의 재정건실화를 위한 구조개선방안(Ways to Improve structure of national pension system to keep its finance healthy)
|Series Title; No||연구보고서 / 95-07|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Social Development < Social Welfare|
|Holding||KDI; KDI School|