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By Lee Kyung-min
Those born in 1990 and after may not be able to receive monthly pensions from the National Pension Service (NPS) 30 years from now, unless the state-run organization overhauls its fund operations, a private think tank report said Thursday.
Subscribers of the Korean pension fund, relative to their peers in five major countries, contribute less and receive less, a systemic flaw borne out by its low income replacement rate of 35.4 percent in 2020, nearly 20 percentage points lower than the five's average of 54.9 percent.
Korea Economic Research Institute (KERI) under the Federation of Korean Industries said the country's future generations will suffer, if pension reform does not take place immediately.
"Data from the National Assembly Budget Office show that the fiscal balance of the NPS is expected to register a deficit in 2039, and its reserves will be depleted in 2055," the report said. "The number of pension recipients to be supported per 100 subscribers is expected to spike to 93.1 in 2050, nearly a five-fold increase from 19.4 in 2020.
Korean subscribers receive the state pension as early as 62, far sooner than those in the five countries that receive it at the age of 65 at the earliest.
Korea's monthly premium rate is 9 percent, less than half of the five country's average of 20.2 percent.
"The discussion on pension reform keeps being delayed for months on end," KERI official Choo Kwang-ho said. "Equally important as reform of the state-run pension fund is government policy revisions, for example greater tax deductions for private pension subscribers," he added.
