The Korea Economic Research Institute (KERI) believes that the youth born after 1990 will be unable to claim their pensions as the current system is close to collapsing. South Koreans may claim their pensions at the age of 62, which is about three years earlier than other G5 nations. The G5 plans to raise the age to 67 to 75, while South Korea plans to implement an age requirement of 65 to 67.
Yet, South Korea’s population is aging rapidly. In the near-term, the nation will be faced with a “superaged society;” by 2025, 20.3% of the population will be 65 or older, and that percentage will increase to 37% by 2045.
Insurance premiums for Korea’s public pension are around 9%, while the G5 average is 20.2%. South Koreans are also required to contribute for a shorter term to receive a pension. The current average stands at 20 years, but the G5 average is 31.6 years in comparison. “It is necessary to invigorate the private insurance and pension market alongside more tax benefits and an overhaul of the pension system to brace for a superaged society,” said Choo Kwang-ho, the research head of KERI’s economy policy division.
As I said in 2016, the pension crisis is global. Governments always have their hand in the cookie jar and cannot manage pensions without it becoming a giant Ponzi scheme. Any pension fund that holds government debt in size and thinks it will return to normal is delusional.