Go to Contents Go to Navigation

Some call for raising state pension's income replacement ratio

All Headlines 15:12 August 08, 2018

SEOUL, Aug. 8 (Yonhap) -- Some pension watchers, including policymakers, have argued for the need to increase the state pension's income replacement ratio as more South Koreans are expected to find it difficult to live only on monthly payments from the current scheme.

The government conducts reviews on the financial soundness of the National Pension Service (NPS) every five years, with the latest one -- the fourth of its kind -- currently underway, with the results to be announced by the Ministry of Health and Welfare on Aug. 17.

According to the report, the NPS could run out of money by 2056 or 2057 if current financial conditions continue, three to four years earlier than previously projected by the government.

In accordance, some pension fund watchers have argued the measures need to be drawn to increase the state pension's so-called income replacement ratio that has been falling over the past few decades.

South Korea first set the income replacement ratio for pensioners with a 40-year subscription period at 70 percent in 1988, when it adopted the state pension program to guarantee income for the elderly after retirement.

It means that a retiree can receive 700,000 won (US$625) in pension per month if his or her average monthly income during a 40-year subscription period is 1 million won.

However, the target has been on the decline amid worries about an early depletion of the national pension fund. The government cut the income replacement ratio to 60 percent in 1998 before revising down to 45 percent in 2018. The ratio is slated to drop to 40 percent in 2028.

Rep. Jung Choun-sook of the ruling Democratic Party has argued that the ratio should be stopped at 45 percent as of 2018 and increase 0.5 percentage point each year to reach a 50-percent level by 2028.

khj@yna.co.kr
(END)

HOME TOP
Send Feedback
How can we improve?
Thanks for your feedback!