South Korean President Yoon Suk-yeol announced plans to reform the country’s $860 billion public pension fund. He emphasized the need for urgent changes to ensure the fund’s long-term sustainability. The current state of the public pension system requires immediate and comprehensive reform to serve the public and future retirees better,” President Yoon said during a press conference in Seoul.
The proposed reforms address concerns about the pension fund’s viability as South Korea faces an aging population and increasing life expectancy. President Yoon outlined several areas for review, including adjusting contribution rates, retirement age, and improving the fund’s management efficiency. These reforms are part of a broader strategy to stabilize South Korea’s social security systems while maintaining fiscal responsibility.
The president also proposed increasing pension premiums for various age groups at different rates to make the program more acceptable to younger generations. “It is necessary to differentiate the rate of increase in pension premiums between the younger and middle-aged generations,” Yoon stated during a televised policy briefing. He emphasized the importance of catering to younger people, who pay the highest premiums for the most extended period and receive their pensions last.
pension fund sustainability efforts
Yoon pledged to reform the basic, retirement, and private pension programs based on sustainability, intergenerational fairness, and post-retirement income security. Detailed reform plans will be announced soon.
South Korea faces a looming demographic crisis, with the world’s lowest birth rate and a rapidly aging population. The number of children a woman is expected to have in her lifetime dropped to 0.72 in 2023, well below the replacement rate needed to maintain a stable population. The country’s pension fund, the world’s third-largest, is valued at more than 1,113.5 trillion won.
Government projections indicate that the fund’s growth will cease by 2041 and is expected to be depleted by 2055. This is largely due to baby boomers who contributed throughout their lifetimes now retiring, while eligibility for full pension benefits was rare in the past. Nearly two-fifths of Koreans in their twenties and thirties expressed in a recent poll that the pension system needs reform to ensure future benefits.
Yoon announced plans to extend credit benefits to individuals with children or complete military service, ensuring that “there is no gap in the pension subscription period.
