Published 21 Jun.2020 16:30(KST)
[Asia Economy Reporter Jang Sehee] It is projected that the National Pension Fund will be depleted by 2054. Accordingly, there are calls for active discussions on reforming the National Pension system.
According to the 'Social Security Policy Analysis Report' published on the 21st by the National Assembly Budget Office, the National Pension Fund is expected to shift to a deficit of 16.1 trillion won by 2040. Furthermore, by 2054, the deficit is projected to increase to 163.9 trillion won, resulting in the complete exhaustion of the reserve fund.
The Budget Office recalculated the depletion timing of the National Pension Fund using the latest data from the 2019 future population projections, whereas the government applied the 2016 future population projections from Statistics Korea during its 2018 fiscal outlook.
Additionally, while the government forecasted using macroeconomic variables for fiscal calculations and applied asset-specific portfolio weights and expected returns, the Budget Office explained that it applied its own variables and used the average ratio of the National Pension Fund's returns compared to corporate bond yields.
The Budget Office advised that since the depletion of the National Pension Fund could occur sooner than expected, pension reform should be expedited. The office stated, "To strengthen the role of the National Pension in securing retirement income and to enhance the financial sustainability of the pension, it is necessary to promptly complete pension system reforms based on public opinion." It added, "The government needs to analyze and provide more comprehensive data, including projections of fiscal changes resulting from the reforms."
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