By Kim Jae-won
Three out of 10 Korean senior citizens have to work after retirement due to snowballing household debt, a weak national pension system and little support from their offspring, according to a leading insurance company, Friday.
In its latest study on retirement, the Insurance and Finance Institute of Samsung Life found that the portion of the working elderly reached 29.3 percent in 2010, four times the average for advanced countries at 7.7 percent. More precisely, working elderly refers to those aged of 65 or older who still need a job to make end meet.
The comparable ratio for developing nations stood at 23.9 percent. The ratio for most developed nations marked less than 5 percent. For instance, France recorded 1.3 percent, while Germany and Italy registered 2.1 percent and 3.2 percent, respectively.
There are many reasons for such a high working elderly population ratio but mounting household debt is one of the key culprits.
Ronald Man, an economist from HSBC, says that household debt is one reason which keeps seniors working after retirement.
“More household debt has shifted to the older population. Around 46 percent of household debt is owed by Koreans over the age of 50, according to the latest financial stability report by the Bank of Korea,” said Man in an e-mail interview.
Park Ji-hee, a senior researcher of the institute, says the fragile national pension system is another reason for the gloomy portrayal of Korean seniors.
“National pension payments accounted for only 2.1 percent of the income for seniors in 2009. Due to this, seniors must work to make ends meet,” said Park in the report.
Experts say Korea’s national pension system is still in its early stages. The government introduced it in 1988, and the benefits reached all nationals in 1999, but the ratio and amount of pension payment is still small.
In 2009, only 24.1 percent of those aged 65 or more were given an average of 186,000 won per month, according to the Samsung report.
Park also pointed out that more recently fewer children are supporting their parents after retirement. According to a survey, only 36 percent of respondents said that children should support their parents financially after retirement in 2010, drastically down from the same survey conducted in 1998, when 90 percent of people said they should do so.
Korea has relied on a so-called family support insurance system, but the trend, where children support their retired parents, has changed quickly making the nation’s baby boomers less secure after retirement.
To tackle the problems associated with the working elderly, Man stresses that the government needs to encourage people to have more children who can cut the dependency ratio.
“Korea's birthrate is among the lowest in the world and should be increased in order to reduce the country's dependency ratio. In order to achieve this, the government can provide greater incentives that alleviate some of the high costs associated with raising children in Korea, such as higher welfare spending.”