Finance minister nominee vows to overhaul national pension system

Choo Kyung-ho, left, the nominee for deputy prime minister and minister of economy and finance, speaks to Land Minister nominee Won Hee-ryong during a meeting of the presidential transition committee at its office in Jongno District, Seoul, Monday. Joint Press Corps

By Yi Whan-woo

Deputy Prime Minister and Minister of Economy and Finance nominee Choo Kyung-ho has called for an overhaul of the state pension fund, which experts agree is crucial considering the country's aging and shrinking population.

“Given the low birth rate and the increase in the elderly population, failure in reform will dent the fund's financial soundness and drastically increase the burden on younger generations,” Choo said in a Q&A submitted to the National Assembly as part of the preparations for his Assembly hearing scheduled for May 2.

He views the current pension fund management system under the National Pension Service (NPS) as inefficient, saying, “It will only increase the national debt and will not last long.”

He called for a “comprehensive check-up” on the premium rates and the minimum age that people are eligible to receive pension benefits, among other factors.

The pension fund is on course to be depleted under the existing system, possibly in the 2050s.

Worse still, the population is aging rapidly.

According to the Korea Economic Research Institute, which operates under the wing of the business lobby group, the Federation of Korean Industries, the ratio of those aged 65 and older is expected to rise from the current 17.3 percent of the population to 37.0 percent in 2045, surpassing the world's No. 1, Japan, with 36.8 percent.

The institute also speculated that the fund will go into a deficit in 2039 and be depleted in 2055 if the pension scheme is maintained as it is.

In 2055, those born in 1990 will reach 65, the age when they can begin to claim pension benefits, but the pension fund will have dried up.