SEOUL, South Korea's pension system, standing as one of the world’s largest in terms of accumulated funds, faces urgent calls for reform as its inefficiency and unpopularity become more apparent.
According to Yonhap News Agency, an editorial published on Nov. 1 by Korea Times, the accumulated national pension fund in Korea has surpassed 1,000 trillion won ($740 billion), positioning it among the top three worldwide. However, a foreign report placed the country’s pension system at a lowly 42nd out of 47 countries, and it ranked last in the adequacy subindex, which evaluates benefits, government support, and asset growth. This has led to a scenario where nearly 80 percent of Koreans recognize the need for reform, as they currently contribute less and subsequently receive less from the pension system.
The editorial notes that while the largest share of survey respondents, about 40 percent, expressed a desire to contribute more in order to receive more in benefits, the government's recent reform plan, approved in a Cabinet meeting, failed to deliver concrete figures or substantial details. President Yoon Suk Yeol addressed criticisms of the plan, stating that pension reform cannot be conclusively resolved by merely presenting numbers without a solid basis or social consensus. However, this response has raised questions about whether the government is confusing its role with that of the public, or is perhaps attempting to play it safe with the upcoming elections in mind.
The editorial highlights the urgency of the situation, referencing the previous government's delay in pension reform which has now led to predictions of the pension fund drying up by 2055, two years earlier than initially estimated. With the country’s extremely low birthrate, further delays could exacerbate the issue, leading to a future where Koreans might have to contribute at least one-third of their incomes to receive pension benefits.
Experts have long offered clear solutions, According to Yonhap News Agency, the editorial, including raising the premium rate from 9 percent to at least 15 percent, extending the pensionable age by at least two years, maintaining the income replacement rate at 40 percent, and improving fund management returns by 1 percentage point or more. The editorial concludes by calling on President Yoon to exhibit political will and courage, urging him to take swift and decisive action on pension reform, as well as on other critical sectors like labor and education, for the sake of Korea’s future progress.