Description: Korea : The Korean Pension System at a Crossroads

Korea : The Korean Pension System at a Crossroads

Old age income security in Korea is at a crossroads. The traditional system of family support is giving way to formal retirement savings--most of it mandated by government. Government employees and private school teachers are obliged to participate...

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Bibliographic Details
Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2013
Subjects:	PENSION REFORM MANDATORY SAVING PROGRAMS PAYROLL TAXES SOCIAL SECURITY SOCIAL SECURITY LEGISLATION SOCIAL SECURITY TAXES SOCIAL SECURITY SYSTEMS FAMILY ASSISTANCE RETIREMENT BENEFITS RETIREMENT PROGRAMS RETIREMENT POLICY PAY-AS-YOU-GO SYSTEMS SEVERANCE PAY SOCIAL ASSISTANCE PROGRAMS PUBLIC PENSION SYSTEMS PRIVATE PENSION FUNDS LABOR FORCE PARTICIPATION GOVERNMENT EMPLOYEES REPLACEMENT WORKERS PENSION SAVINGS PLANS PENSION TAXATION PENSION COVERAGE PENSION FUNDS ADMINISTRATION PENSION LAW PENSION VALUATION ACCOUNTING ACCOUNTING STANDARDS ACCRUAL RATES AGED AGING ANNUITY BARLEY BENEFIT FORMULA BENEFIT PAYMENT CAPITAL MARKETS CD CERTAIN EXTENT CIVIL SERVICE CONTRIBUTION RATE CONTRIBUTION RATES DEFICITS DEFINED BENEFIT PLANS DEFINED BENEFIT SCHEMES DEPENDENCY RATIO DIVIDENDS EARNINGS GROWTH ELASTICITIES EMPLOYMENT EXPENDITURES FAMILIES FAMILY SUPPORT FINANCIAL MANAGEMENT FINANCIAL SECTOR FINANCIAL SERVICES FISCAL POLICY GDP GROSS WAGES INCOME LEVELS INDEXATION INSURANCE COMPANIES INTEREST INCOME INTEREST RATES INTERNATIONAL ACCOUNTING STANDARDS INVESTMENT RETURN INVESTMENT RETURNS LABOR COSTS LABOR FORCE LIFE INSURANCE LIFETIME EARNINGS LIVING STANDARDS MANDATES MANDATORY RETIREMENT MANDATORY SCHEMES MARKET DISTORTIONS MINIMUM BENEFIT MORTALITY NEW ENTRANTS NORMAL RETIREMENT AGE OCCUPATIONAL SCHEMES PAYROLL TAX PENALTIES PENSION FUNDS PENSION PLAN PENSION RESERVE PENSION RIGHTS PENSION SCHEMES PENSION SYSTEM PENSIONS PER CAPITA INCOME PERSONAL PENSION PLANS PRIVATE PENSION PRIVATE SAVINGS PRIVATE SECTOR PUBLIC POLICY PURCHASING POWER RELATIVE VALUE REPLACEMENT RATE REPLACEMENT RATES RETIREMENT RETIREMENT INCOME RETIREMENT INCOME SECURITY RETIREMENT SAVINGS SAVINGS BEHAVIOR SAVINGS INSTITUTIONS SECURITIES SOCIAL ASSISTANCE SOCIAL INSURANCE SUICIDE TAX EXPENDITURES TAX RATE TAX RATES TAX TREATMENT UNEMPLOYMENT VOLUNTARY PENSIONS WAGE HISTORIES WEALTH WORKERS WORKPLACE
Online Access:	http://documents.worldbank.org/curated/en/2000/05/437671/korea-korean-pension-system-crossroads http://hdl.handle.net/10986/15146

Description
Summary:	Old age income security in Korea is at a crossroads. The traditional system of family support is giving way to formal retirement savings--most of it mandated by government. Government employees and private school teachers are obliged to participate in special occupational schemes that operate on a pay-as-you-go basis while private sector workers must contribute to the partially funded National Pension Scheme (NPS). Employers must provide retirement allowances, a retirement cum severance payment program whose obligations are largely unfunded. These schemes have evolved over several decades and are not based on clear targets for the level of mandated retirement income or sustainable payroll tax burdens. They currently pay benefits to a minority of older Koreans. This means that over the next few years only social assistance programs will have a significant impact on the incomes of the current elderly poor. This report presents several alternative reform options. These include reforms to some elements of the existing system as well as an integrated or systemic reform option. The proposed reform allows younger workers to opt out of the earnings-related portion of the NPS. The combination of a mandatory private pension scheme--which would replace retirement allowances--and a reduced public pension scheme would result in a reasonable replacement rate target. New entrants would be obliged to join this system while older workers would continue to be covered by the current scheme.

Korea : The Korean Pension System at a Crossroads

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