ed Nonagenarian society

People need longevity management

Korea is fast becoming a nonagenarian-and-centenarian society. By 2026, it is estimated that nearly one out of every five citizens will be 65 or older. The time has come for the government, companies and workers to prepare for this aging society.

According to the Korea Institute for Health and Social Issues (KIHASI), only 28.7 percent of Koreans aged between 30 and 69 said that living beyond their 90s would be a blessing. Forty-three percent say longevity is not always a blessing.

Their mixed feelings over living past 90 reflects the current hardship seniors are facing and the unpreparedness of the young for their post-retirement life.

Living beyond their 90s is something many in society have not yet experienced. Few people have imagined or prepared for their longevity. Few governments worldwide have kept in place welfare programs for seniors aged beyond 90 years.

It took up to a century for industrialized countries like the United Kingdom, Germany and Japan, to become super-aged societies, but it will take only 26 years for Korea to join the club. People and the government have yet to prepare for the fast-aging society. But when there is a problem, there is always a solution.

Increasing jobs for older people is the best welfare policy. Korea ranks higher than its OECD peers in the labor market participation rate for people in the 55-to-64 age group, standing at 62.7 percent.

Korea’s poverty rate for seniors is 45 percent, the highest in the OECD. Old-age poverty, however, is largely a legacy from the past.

The government can provide tax incentives to companies extending the retirement age beyond the current 55.

Companies will be willing to keep productive senior workers when they get tax incentives. Workers must be ready to accept the scrapping of the seniority-based wage system as they approach retirement age.

The OECD advised the Seoul government to accelerate the increase in the pension eligibility age from 60 to 65 to help ensure the financial sustainability of the National Pension Scheme. Pension and medical reform should become priorities in reducing old-age poverty.

The government should continue to adopt a policy to hike the low birth rate. This would bring about a younger and more dynamic society. Importing more specialized workers and experts could boost the dynamism of the country. In addition, Korean scientists and engineers need incentives to remain in their motherland.

Government alone cannot solve the welfare problem. As President Lee Myung-bak said, welfare populism should be the last option. The country needs to increase social spending, but within budget constraints, and in a productive way.

Individuals need to save additionally for their post-retirement life. Koreans’ post-retirement assets are equal to 17.5 percent of GDP, well below the 84 percent in the U.S. and 39 percent in Japan. Less than one-third of the workers subscribe to individual retirement accounts.

The government, companies and workers must share the responsibility for managing longevity.