The national pension will be completely depleted by 2055 due to Korea’s rapid aging, and analysis suggests that people born in 1990 may not receive a single penny of the national pension. Considering the poverty issue for the elderly and concerns about the depletion of the national pension, the argument that pension reform is urgent was raised.
The Korea Economic Research Institute made this statement on the 13th after analyzing data from the Organization for Economic Cooperation and Development (OECD), the National Statistical Office, and the National Assembly Budget Office.
According to the Korea Economic Daily, the elderly poverty rate in Korea was 40.4% as of 2020, ranking first among 37 OECD countries. This is about three times higher than the national average of 14.4% of the five major countries (G%).
The aging rate is also fast. The proportion of the 65-year-old population in Korea will record 20.3% in 2025, surpassing the United States (18.9%) and entering a super-aged society. .
Although the problem of poverty among the elderly is worsening, it has been found that both public and private pensions in Korea do not perform the function of guaranteeing old-age income. As a result of comparing the main sources of income for old age, the share of public transfer income (25.9%) such as the national pension and basic pension in Korea was significantly lower than the G5 average (56.1%). The supplementary function of public pensions such as private pensions and private transfer income such as capital income (22.1%) was also found to be weak.
The Korea Economic Daily argued that if pension reform was not implemented immediately, a huge tax burden would be passed on to future generations.
According to the National Assembly Budget Office, the fiscal balance of the national pension is expected to turn into a deficit in 2039 and the reserve will be exhausted in 2055. In addition, the number of beneficiaries to support per 100 national pension subscribers is expected to increase fivefold from 19.4 in 2020 to 93.1 in 2050.
“If the current national pension system is maintained, people born in 1990 who are eligible to receive the national pension in 2055 may not receive a single penny from the national pension. have to embrace it,” he said.
Choo Gwang-ho, head of economic policy at the Korea Economic Daily, said, “I am concerned that the burden of supporting the elderly will be enormous due to the rapid increase in the national pension system support cost and the prospect of depletion of funds. There is an urgent need to revitalize private pensions such as expansion.”
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