콘텐츠 바로가기
로그인
컨텐츠

Category Open

Resources

tutorial

Collection of research papers and materials on development issues

home

Resources
Social Development Health

Print

The national pension scheme of the Republic of Korea (English)

Related Document
Frame of Image
  • The national pension scheme of the Republic of Korea (English)
  • Yang, Bong-min
  • World Bank (WB)


link
Title The national pension scheme of the Republic of Korea (English)
Similar Titles
Material Type Reports
Author(English)

Yang, Bong-min

Publisher

World Bank (WB)

Date 2001
Language English
File Type Link
Subject Social Development < Health

Abstract

This paper presents the experience of the Republic of Korea, in setting up a National Pension Scheme (NPS), and assesses its likely effectiveness in coping with future challenges. The Korean NPS has features of both pay-as-you-go system, as it does not have adequate reserves to guarantee the promised annuities, and a fully-funded system, since payments are regularly made into a pension fund which could then be invested. It also has aspects of both public, and private pension systems, public, in terms of the management, and regulation of its coverage, and benefits, and, private, in terms of its financing where the involvement of the central government is limited to subsiding the operational expenses of the management agency, called the National Pension Corporation. The Korean NPS is likely to face future challenges, due to rapid demographic changes, such as the increase in the elderly population, and the reduction of family size due to low fertility rates. These changes are likely to seriously test the viability of the NPS, the coverage of which seems to have expanded too fast, too soon. Two main lessons are drawn: 1) a pension system should be based on accurate financial, and demographic projections, which affect its long-term sustainability, and, 2) it is better to take a gradual approach by starting with a limited coverage, low-benefit package, and, upgrading it over time, in keeping with the performance of the economy.