The National Pension Service (Image courtesy of Yonhap)
SEOUL, Aug. 19 (Korea Bizwire) – As the South Korean government prepares to unveil its national pension reform plan, a recent survey has revealed that younger generations, particularly those in their 20s and 30s, are more concerned about the likelihood of receiving pension benefits in the future than the system’s financial stability.
The survey, conducted by the Korea Statistics Research Institute on behalf of the National Pension Service, found that 38.3% of respondents in their 20s and 37.8% of those in their 30s cited “increasing the certainty of receiving future pension benefits” as the primary reason for pension reform.
This stands in stark contrast to the older generation, with 40.6% of respondents in their 50s prioritizing “potential future instability of the national pension finances” as the main reason for reform.
President Yoon Suk Yeol is expected to announce the government’s reform plan by early next month. Sources close to the matter suggest that the proposal may include a tiered increase in contribution rates based on age groups, departing from the current uniform rate system.
Under the proposed plan, older generations would see their contribution rates increase more rapidly than younger cohorts.
For instance, if the current 9% contribution rate were to be raised to 13-15%, older workers might see annual increases of 1 percentage point, while younger workers would experience more gradual 0.5 percentage point annual increases.
A presidential office spokesperson emphasized that “pension reform focusing on intergenerational equity and sustainability could potentially delay the fund’s depletion by more than 30 years from the current projection of 2055.”
However, the proposed age-based contribution rate increase is unprecedented globally and is likely to face significant challenges.
Previous attempts at pension reform have been marred by political gridlock, and experts anticipate that this round of negotiations will be no less contentious.
Earlier this year, the ruling and opposition parties came close to agreeing on a parametric reform that would have increased both contributions and benefits.
The talks ultimately collapsed due to political disagreements and the ruling party’s insistence on coupling parametric reforms with structural changes.
Oh Jong-heon, secretary general of Public Pension for All, expressed concern about the government’s approach.
“Proposing an intergenerational differential in contribution rates without prior discussion in the National Pension Fund Management Committee suggests an unwillingness to engage in further dialogue,” he said.
“This approach may make it difficult to find common ground.”
M. H. Lee (mhlee@koreabizwire.com)
