Myeongdong Street in central Seoul bustles with people during lunch time in this photo taken on Oct. 13, 2021. (Yonhap)
SEOUL, Jan. 14 (Korea Bizwire) — A recent report has called for the need to reform South Korea’s pension system as quickly as possible, given the nation’s rapid population ageing and elderly poverty problem.
The Korea Economic Research Institute (KERI), the research arm of the country’s conglomerate lobby Federation of Korean Industries, said in a report released on Thursday that if the nation’s state pension system remains unchanged, those born after 1990 who are set to receive the pension from 2055 will likely fail to claim their contributions.
For South Korea, the age at which people are eligible to receive state pension payments is scheduled to be raised from the current 62 to 65 starting from 2033.
However, this is still younger than the age for the Group of Five (G5) countries — the United States, Britain, France, Germany and Japan — which plan to raise the age from between 65 and 67 to between 67 and 75.
The share of those who subscribed to private pensions among those aged from 15 to 64 stood at 17 percent in South Korea, far lower than 55.4 percent for G5 countries.
The KERI suggested that the primary factor behind the low subscription rate is the lack of incentives, among others, low tax support (Korea: 19.7 percent vs. G5: 29 percent).
According to the National Assembly Budget Office, the financial balance calculated by deducting expenditures from income in the state pension will turn to a deficit in 2039 and will be depleted in 2055.
J. S. Shin (js_shin@koreabizwire.com)
