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SEOUL: South Korean President Yoon Seok-yeol said on Thursday (Aug 29) that the National Pension Fund, one of the world’s largest with $830 billion in assets, needs urgent reform to make it fairer and ensure income security for the ageing population.
Yoon Young-chul told a televised briefing that people have lost confidence in the pension system for generations and fundamental, sustainable reforms are needed to restore the trust of those who will need it in retirement.
“It is time for a fundamental reform of the state pension system which is distrusted by both old and young people,” he said.
Yin said contributions must be increased to ensure the fund’s sustainability, and the growth rate must also be differentiated for different age groups to make it more equitable.
“We will be pushing for some reforms that will be persuasive to young people, because they are the ones who have paid into the fund the longest and will be the last to receive pensions.”
“The pension system that impoverishes the elderly and makes young people suspicious must be fundamentally reformed,” he said.
Established in 1988, the Korean Public Pension Fund is currently the world’s third largest pension fund, with total assets of 1,113.5 trillion won (833.98 billion U.S. dollars). It is expected that payments from the Korean Public Pension Fund will exceed contributions starting in 2041 and will be depleted by 2055.
The mandatory contribution rate for salaried workers and business owners to pension plans is 9% of their income, compared with 10.6% in the United States, 18.3% in Japan and an average of 15.4% for member countries of the Organization for Economic Cooperation and Development (OECD).
Average spending accounts for 31.2% of the average salary, compared with the OECD average of 50.7%, meaning that South Korean seniors are among the poorest groups among OECD economies.
Reforming the system has been a policy goal of several South Korean presidents, but there has been little progress due to disagreements over how to handle the issue.
Yoon also said he was pushing ahead with ambitious health care reforms, saying the focus now was on improving the quality of care in important disciplines and in areas outside major cities.
He said more than 10 trillion won will be invested over the next five years to improve services in those areas.
The medical reform promoted by Yin Yongzhe has been Doctors’ strong oppositionOpposing his plan to increase the number of new medical students each year to address a shortage of doctors, thousands of young doctors went on strike in February to protest the reforms, disrupting hospital services.
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