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Implications of recent income distribution trends on national pension reform discussions

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Frame of Image  Reform Discussions
Heesuk Yun, Professor at KDI School
“The maturing of the National Pension scheme has helped improve income distribution recently, but its effect has been limited due to a large coverage gap in the system. Against this backdrop, the focus in pension reform discussions needs to be reset toward enhancing enrollment instead of heightening the replacement ratio.”
Income distribution in Korea has exhibited signs of improvement in recent years. A deterioration in distribution since the early 1990s seemingly lessened after the late 2000s. Still, experts deferred any judgment, not saying whether the trend was temporary or sustainable. Now that the latter has been observed for a considerable period, it is time to find the source of the trend and identify the policy implications. This paper used income data collected on all households, including single-person households, since 2006, when it first became available. Analysis focused on the trajectory of income composition. It found that the National Pension (NP) scheme is much more important than any other income source or government support. It also found that a smaller pension coverage gap and a longer entitlement period are more essential than enhancing the income replacement ratio of pension recipients. More fundamentally, instead of solely focusing on income guarantee from the NP, the government needs to
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[Figure 1] Changes in the Poverty Rate
18 16 14 12 10 8 6 4 2 0 ’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98


Full Text
Title Implications of recent income distribution trends on national pension reform discussions
Similar Titles
Material Type Reports
Author(English)

Yun, Heesuk

Publisher

[Sejong] : Korea Development Institute

Date 2016-11
Series Title; No KDI Focus / No. 76
Pages 11
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < General
Social Development < Employment
Holding KDI
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