Seoul Seeks to Close Retirement Gap With Sweeping Pension Overhaul
SEOUL, Oct. 29 (Korea Bizwire) — South Korea has convened labor, business and government representatives to pursue the first major overhaul of the nation’s retirement pension system in more than two decades, aiming to strengthen income security for an aging workforce.
The Ministry of Employment and Labor on Tuesday launched a tripartite task force dedicated to improving pension adoption rates and boosting investment returns, calling the effort essential to preventing widening inequality in old age.
Central to discussions will be two structural reforms: mandating pension adoption for employers and introducing a fund-based pension management system. Officials will examine phased requirements for small enterprises, ways to ease the financial burden on smaller firms, and enforcement mechanisms to ensure compliance.
Pension coverage remains highly uneven. As of late 2024, 92 percent of companies with 300 or more employees had adopted retirement pensions, compared with just 23.7 percent among firms with fewer than 30 workers. The national adoption rate stands at 26.8 percent.
The task force, led by senior labor researcher Jang Ji-yeon, includes representatives from both major labor federations, business groups and youth advocates, whose generation will bear the longest-term effects of the reforms.
Meeting every two weeks, the group aims to produce a joint agreement or formal recommendations by year’s end.
“The current system risks turning labor-market disparities into disparities in retirement security,” Vice Labor Minister Kwon Chang-joon said. “Mandatory pension adoption and a fund-based framework could become a turning point toward ensuring stable retirement income for all workers.”
Ashley Song (ashley@koreabizwire.com)
Getting the (English and Korean) terminology right would be a start. No-one understands what all the odd misnomers are: retirement pension, private pension, company pension, fund-based pension, lump-sum payment, etc. means, or what the details are and certainly very few trust banks and insurance firms to have explained things correctly either. Then who is not to day that 10yrs down the line the government doesn’t suddenly change the conditions or raise taxes to levels making investment in the tools not really worth it or even a loss in the end?! That is the crux of the issue: trustworthiness.