[How Is Your Dream] National Pension Fund to Deplete by 2054... Payments Continue Even After Reserves Are Exhausted

Explicit National Payment Obligations, Strengthening the Public Foundation

[Asia Economy Reporter Choi Dae-yeol] The National Pension is not a concept where 'I receive the insurance premiums I paid.' The insurance premiums paid now are used for the retired parent generation, and we are supported through the premiums that our children’s generation will pay. According to Professor Joo Eun-seon of the Department of Social Welfare at Kyonggi University, the basic goal of public pensions is not to compensate according to contributions but to ensure that the retired generation, which steps back in the primary distribution process of economic growth outcomes, can equally enjoy the benefits. It is an approach that seeks to address old-age care responsibilities not solely on individuals but through social solidarity.

The National Pension insurance premium rate is 9%, with most workplace subscribers and their employers each bearing 4.5%. For a worker with an average monthly income of 2.45 million KRW, they pay about 110,000 KRW per month (the company also pays 110,000 KRW), and if they have been enrolled for 40 years, they receive 980,000 KRW (old-age pension) after retirement. Considering that the average premium payment period is about 25 years, the pension after retirement is approximately 620,000 KRW. Enrollment must be for at least 10 years, and since 2013, the pension eligibility age has increased by one year every five years. Under current standards, those born up to 1960 can start receiving at age 62, those born between 1961 and 1964 at age 63, and from those born in 1969 onward, at age 65.

Although projections vary by source, if the current state continues, the fund will be depleted within several decades. According to forecasts released by the Ministry of Economy and Finance last year, deficits will begin in 2041, and by 2056, the reserves will be fully exhausted. The National Assembly Budget Office predicted in a 2019 report that deficits would start in 2040 and depletion would occur by 2054. However, the National Pension is designed to continue payments even after reserves are exhausted. There are calls to strengthen the public foundation of the National Pension by adjusting the premium rate and income replacement rate and explicitly stating the government’s payment obligations. This is to delay the depletion timing while enhancing the actual security effect for the elderly generation.

This content was produced with the assistance of AI translation services.