SEOUL, Sept. 27 (Korea Bizwire) – South Korea’s pension subscription rate is too low to be able to handle the growing elderly population, and tax benefits may be one way of inducing people to sign on to private pensions for post-retirement life, a local research institute said Tuesday.
According to the Hana Institute of Finance, the subscription rate for personal and retirement pensions in South Korea is 23.4 percent. By comparison, this is less than one-third the rate in Germany (71.3 percent) and falls far behind other countries like the United States (47.1 percent) and Britain (43.3 percent).
Only 16.7 percent of local businesses operate retirement pensions, according to the findings by the institute.
The subscription rate falls even lower as income drops. For those earning less than 20 million won (US$18,034) a year, only 3.8 percent are enrolled in a pension plan.
South Korea’s aging society has raised a worrisome specter of the elderly falling into poverty with no safety net available. The poverty level of people over 65 was 49.6 percent in 2013, more than three times the average for member states of the Organization for Economic Cooperation and Development (OECD).