Let's not hand over empty funds to future generations
An analysis showed that babies born this year will have to pay 17 percent of their future monthly salary in insurance premiums from the age of 18 ― in 2040 ― to receive similar pensions to their parents. According to the Korea Institute for Health and Social Affairs (KIHASA), this year's newborns must also pay a quarter of their income while in their 30s, one-third in their 40s, and 40 percent in their 50s and 60s, in order to receive the same pension as their parents.
There have long been warnings that if the current trend continues, the pension fund will be completely depleted in 2055 when people born in 1990 turn 65. That means the current generation will hand over an "empty pension fund" to their children, the first generation poorer than their parents. To make matters worse, Korea's tempo of population aging is the fastest, and its birthrate is the lowest worldwide. The share of the population aged 65 and older will rise to 37 percent in 2045 to exceed Japan.
Considering that the total fertility rate ― the average number of children a woman bears in her lifetime ― remained at 0.81 last year, the pension fund's depletion may come earlier than expected. The Moon Jae-in administration considered raising premiums in the early days of its term, but backed off later, expecting possible resistance. Due to the incumbent government's dereliction of duty, people must pay an additional premium of at least 15 trillion won ($12.3 billion).
The slower the pension reform, the greater the disaster for future generations. The presidential transition team has decided to tackle the pension issue as an essential agenda item and the next government should waste no time in addressing the matter. The transition team sought to work out a reform road map on which all classes and generations could agree so as to persuade the public. As it stands though, the main principle of pension reform appears to be one of paying more to receive less. The National Assembly should also begin a bipartisan deliberation for future generations.
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