{"id":2201187,"date":"2023-05-29T19:40:52","date_gmt":"2023-05-29T10:40:52","guid":{"rendered":"https:\/\/koreapro.org\/?p=2201187"},"modified":"2023-05-31T15:03:09","modified_gmt":"2023-05-31T06:03:09","slug":"working-through-retirement-how-south-koreas-pension-system-is-failing-seniors","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/05\/working-through-retirement-how-south-koreas-pension-system-is-failing-seniors\/","title":{"rendered":"Working through retirement: How South Korea\u2019s pension system is failing seniors"},"content":{"rendered":"

At 66, Kim Sook-hyang applies her energy daily to cleaning an apartment complex in Gangnam, sparing only Sundays. For seven hours a day, her labor earns her $600 per month, a grueling feat for her aging frame. Yet she has to keep working.<\/span><\/p>\n

\u201cI didn\u2019t know I\u2019d still have to work at this age,\u201d Kim told <\/span>Korea Pro<\/span><\/i>.<\/span><\/p>\n

Once a nursing assistant at a university hospital, Kim retired at 58 after almost 30 years of diligent service, expecting a peaceful retirement supported by her pension. Now living solo, she finds herself in the unenviable position of adding to her modest $700 monthly pension from the university \u2014 a sum deemed generous compared to the stipends of other Korean retirees.<\/span><\/p>\n

\u201cI don\u2019t want to be a burden to my child. I\u2019m determined to work as long as I can to support myself,\u201d she said.<\/span><\/p>\n

Kim is not an isolated case. A growing number of South Korea\u2019s seniors are being thrust into the gig economy, seeking supplemental income to bridge the gap in their finances as the pension system struggles to support the nation\u2019s rapidly aging population.<\/span><\/p>\n

South Korea\u2019s elderly poverty rate alarmingly ranks the highest among the nations in the Organization for Economic Co-operation and Development (OECD) \u2014 standing at <\/span>43.4%<\/span><\/a>.<\/span><\/p>\n

This economic distress often manifests in severe psychological strain, leading to high depression and suicide rates among the elderly. South Korea\u2019s <\/span>elderly suicide rate<\/span><\/a>, at 46.6 per 100,000 people, is nearly three times higher than the OECD\u2019s average rate of 17.2.<\/span><\/p>\n

For Song Young-cheol, 69, these systemic issues have led him to reassess his worth and purpose post-retirement.<\/span><\/p>\n

\u201cI was starting to understand why people say you should just die when you\u2019re old,\u201d Song told <\/span>Korea Pro<\/span><\/i>. \u201cWith no money in my pocket and nowhere to belong, I started to contemplate the meaning of my life.\u201d<\/span><\/p>\n

His declining health has narrowed his job options. His current employment involves delivering credit cards, for which he earns a dollar per delivery. This provides him with a modest monthly income of approximately $300.<\/span><\/p>\n

\"\"

A person holding a cane | Image: Pexels<\/a><\/em><\/p><\/div>\n

PROVIDING VS SAVING<\/b><\/p>\n

South Korean senior citizens are often burdened with limited savings due to life-long financial commitments to their children, encompassing everything from education costs to wedding expenses.<\/span><\/p>\n

Lee Yeon-jung, a social gerontologist at Chung-Ang University, told <\/span>Korea Pro<\/span><\/i> that the crux of the issue lies in senior citizens\u2019 lack of proactive planning for post-retirement life, or their inability to do so, as their resources have been predominantly channeled into supporting their children.<\/span><\/p>\n

\u201cThis deeply-rooted perception of giving everything and sacrificing for their children is still prevalent,\u201d Lee said. \u201cCoupled with the trend of younger generations increasingly viewing the support of aging parents as less of an obligation, and the shift in traditional familial values, this is creating an adverse situation for the elderly.\u201d<\/span><\/p>\n

Only 19.7% of the population now believes that supporting parents is primarily a familial responsibility, a decrease from 33.2% a decade ago, according to a 2022 Statistics Korea <\/span>report<\/span><\/a>.<\/span><\/p>\n

Echoing this trend, Kim Sook-hyang, the former nursing assistant, admits to having prioritized her child\u2019s future over her own retirement planning.<\/span><\/p>\n

\u201cI didn\u2019t want her to live like me, so I did everything I could to support her education,\u201d she said.<\/span><\/p>\n

This situation is driving Korean senior citizens over 65 to remain in or re-enter the job market. An OECD <\/span>report<\/span><\/a> shows their employment rate at the top of member countries at 34.9%, more than twice the OECD average rate.<\/span><\/p>\n

Finding reemployment is challenging for senior citizens, leading many to settle for low-quality, poorly paid jobs. A mere 4.3% of individuals aged 65 to 74 secure full-time employment within a year of leaving their previous roles, according to the <\/span>Korea Economic Research Institute<\/span><\/a>.<\/span><\/p>\n

\"\"

South Korea’s \u201c<\/span>moon village,\u201d<\/span> typically known as the squatter area, in Busan | Image: Pixabay<\/a><\/em><\/p><\/div>\n

SYSTEM SHORTFALLS<\/b>\u00a0<\/span><\/p>\n

South Korea\u2019s public pension system is reportedly failing to secure the financial stability of its elderly population, experts warn.<\/span><\/p>\n

As of Jan. 2023, the average monthly payout from the <\/span>National Pension Service<\/span><\/a> (NPS) stands at $420 (560,000 won), a figure starkly lower than the $935 (1,240,000 won) earmarked as necessary for a single household by the <\/span>National Pension Research Institute<\/span><\/a>.<\/span><\/p>\n

Those pensioners who have made contributions for 20 years get a paltry 15.4% of their average lifetime income. People must have contributed for four decades to qualify for 40%.<\/span><\/p>\n

\u201cNaturally, the elderly become relatively poor as the country\u2019s economy develops and younger people\u2019s income grows rapidly,\u201d Kim Won-sub, a sociology professor at Korea University and the head of the Korean Pension Association, told <\/span>Korea Pro<\/span><\/i>. He also noted that European countries previously faced similar challenges.<\/span><\/p>\n

\u201cBut the difference is that while European countries reformed their state pension schemes, drastically increasing the income of the elderly by raising premium rates or funneling tax money, Korea has failed to do so.”\u00a0<\/span><\/p>\n

Instead, \u201cKorea has gradually lowered the income replacement ratio from 70% to 60% in 1998 and 40% in 2006.\u201d<\/span><\/p>\n

Kim further criticized the level of the South Korean government\u2019s expenditure on supporting the state pension, stating it constitutes a meager 3% of the country\u2019s GDP. This figure is less than half of the average 8% spent by other OECD countries.<\/span><\/p>\n

However, some experts believe it may be premature to evaluate the effectiveness of South Korea\u2019s state pension system, considering its <\/span>short history<\/span><\/a>. The national pension fund was <\/span>implemented in 1988<\/span>, and pension disbursements began just two decades later, in 2008.<\/span><\/p>\n

\u201cA more accurate comparison with other welfare states would consider the state fund\u2019s projected status in the next 20 to 40 years,\u201d said Yun Suk-myung, a pension researcher at the Korea Institute for Health and Social Affairs. \u201cInevitably, there are not as many pensioners as pension holders for now.\u201d<\/span><\/p>\n

Yun warned that the actual challenges many Korean pensioners face may be obscured, largely because they are more inclined to invest their savings into property.<\/span><\/p>\n

South Korea\u2019s rapidly aging population is expanding at the most accelerated rate among OECD nations, leading to an escalating issue of intensifying elderly poverty, according to experts. The country is <\/span>projected<\/span><\/a> to become a super-aged society within the next seven years, meaning that over 20% of its population will be aged 65 and over.<\/span><\/p>\n

The National Pension Fund, already strained by record-low birth rates and a declining workforce, is projected to enter into a deficit by 2041 and exhaust its funds by 2055, according to a <\/span>report<\/span><\/a> by the National Assembly Budget Office.<\/span><\/p>\n

In response to concerns about the depletion of the pension fund by 2055, President Yoon Suk-yeol is expediting reforms. A <\/span>legislative committee<\/span><\/a>, established last July, is poised to deliver a revised pension system by October. The committee\u2019s focus is on premium rates, replacement income and payout age, with the ultimate goal of ensuring the sustainability of the National Pension Service.<\/span><\/p>\n

In the battle against senior poverty, experts universally affirm the need for pension reform. However, they argue this alone is not sufficient, telling <\/span>Korea Pro<\/span><\/i> there is an equally pressing need to foster more favorable working conditions for senior citizens.<\/span><\/p>\n

But implementing policies to achieve this also \u201cruns the risk of exacerbating an already entrenched intergenerational conflict,\u201d according to Lee of Chung-Ang University, highlighting the difficulties policymakers face as they grapple with challenges facing both the older workforce and the younger generation that will take their place.<\/span><\/p>\n

Edited by John Lee<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Culture & Society<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

At 66, Kim Sook-hyang applies her energy daily to cleaning an apartment complex in Gangnam, sparing only Sundays. For seven hours a day, her labor earns her $600 per month, a grueling feat for her aging frame. 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