3050 Office Workers' Pension Literacy Scores 47.6 Points

[Asia Economy Reporter Junho Hwang] A survey revealed that the pension literacy of Korean office workers is about 47.6 points out of 100. The results indicate not only a general lack of knowledge about pensions but also a lack of interest in pension management itself. While tax benefits related to pensions are important, there is a growing call to improve pension literacy for retirement preparedness.

According to the 2021 Korea Office Workers' Pension Literacy Measurement and Analysis Report published by Mirae Asset Investment and Pension Center on the 22nd, the average pension literacy score of domestic office workers was 190.5 out of 400 points (equivalent to 47.6 out of 100 points). This means they answered correctly 19 out of 40 questions.

Those closer to retirement showed higher pension literacy. People in their 50s (198.1 points) scored about 10 points higher than those in their 30s (187.8 points) or 40s (185.9 points). Most high scorers were also in their 50s.

Knowledge related to the retirement pension system was relatively good, but knowledge about pension management was lacking. The correct answer rate for questions on retirement benefit calculation criteria was high: 78.6% for DC-type and 77.2% for DB-type. In contrast, the correct answer rates for questions on the investment limit for risky assets in retirement pensions (17.3%) and available investment products (28.1%) were low.

Understanding of the tax credit for pension savings account holders was high (81.4%), but knowledge about tax deferral systems and characteristics of pension savings products was poor. The correct answer rate for tax deferral questions was 49.1%, and for identifying non-unit-linked pension savings products, it was only 37.2%.

In particular, understanding of IRP (Individual Retirement Pension) was generally low. Most respondents were unaware of the contribution limits and tax credit limits linked to pension savings. The correct answer rate for questions about contribution limits was 16.8%, and for tax credit limits, it was 31.6%.

In other areas such as public pensions, understanding of the withdrawal phase was lower compared to the contribution phase. The correct answer rates for questions about public pension insurance premium income deductions (74.0%) and national pension premium rates (61.2%)?which are important when making contributions?were high. However, knowledge about taxation on housing pension receipts (20.2%) and inflation adjustments in public pensions (39.4%)?which are important when receiving pensions?was lacking.

Jung Nara, Senior Researcher at Mirae Asset Investment and Pension Center, said, "Understanding of pension management and withdrawal was low, and the ability to utilize various pensions comprehensively was also insufficient. To improve the quality of the pension market, it is necessary to enhance individual pension literacy and supplement support systems so that pensions are effectively managed through nudges such as default options."

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