National Pension Fund to Be Depleted by 2060
By Kang Shin-who
Staff Reporter
The National Pension Fund is expected to be used up by 2060 given the growing number of pension recipients in the coming years, the Ministry for Health, Welfare and Family Affairs said Monday.
The pension fund is expected to be paying out more than it takes in from 2044 finally running out in 2060.
``That's simply because we have to pay more to pension holders going forward in line with the aging society under the current pension structure,'' a pension official said.
Compared to its estimate in 2003, the latest projection of the depletion period is 13 years farther along and the year when the fund posts a loss is delayed nine years, affected by the passage of a pension reform package at the National Assembly in July last year. The reform package, which is designed to curb the drain, basically reduced future payments to pension holders while putting its income on hold.
The fund's accumulated total is expected to top 2 quadrillion won in 2040 and peak at 2.47 quadrillion won in 2043. Premium income will plunge and payments will surge from 2040 in line with a sharp rise in the number of beneficiaries. The first fiscal net loss is expected to reach 5.3 trillion won in 2044.
The current prediction is based on the country's current and future birth rates and economic growth indicators compiled by the National Statistical Office. Depending on estimates used, the fund's depletion can be delayed by a few years, especially if the birth rate increases.
Under the pension law, an advisory panel under the wing of the ministry is required to renew its estimation of the fund's finances every five years.
The panel will hold a public hearing Tuesday on reforming the pension system and will present a final proposal to the ministry by the end of the month.
At the hearing, they will discuss measures to refurbish the pension fund and ways to subsidize insurance premiums for the low-income brackets. They will also talk on how to induce public consensus on reform plans to be proposed by the panel.
Officials from the panel said that the plans will unavoidably raise the burden of premiums for low-income earners in phases to delay the depletion of the fund as long as possible.
Based on the proposal, the welfare ministry will draw up a final plan and submit it to a Cabinet meeting and President Lee Myunb-bak for endorsement. It will seek parliamentary approval in October.