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(Yonhap) |
In a bid to battle the low fertility rate in South Korea, there are ongoing talks to expand the benefits for childbirth by adjusting the childbirth credit system, which reduces the mandated subscription period of National Pension plans for those who have given birth.
There have been demands for changes to the current system in which the government pays for only 30 percent of the increased budget from the various credit systems, with the remaining 70 percent coming out of the National Pension funds.
The credit system was introduced in 2008 to compensate people for allocating their own time to provide what is deemed necessary for the state to function. This includes giving credit for mandated military service and childbirth, the latter of which the current system credits after two or more children.
Subscribers must have been enrolled in the National Pension Service for a minimum of 10 years to receive the benefits once they reach a certain age -- currently 63. However, those who have given birth to multiple children or served mandatorily in the military can have the 10-year required subscription period reduced.
Reducing the mandated period for certain people naturally requires more money. According to data by the NPS in May of last year, the cost of retaining the current credit system is expected to be 102 trillion won ($74.5 billion) from then to the year 2088.
With the rapidly aging population, South Korea is already confronting its demographic crisis with its working-age population slated to start decreasing starting in 2028. The Korea Development Institute projects the National Pension funds will be depleted by 2054 if the country keeps course.
South Korea recently said that it is considering plans where the government will shoulder more of the financial load stemming from expanding the credit system.
South Korea mandates everyone between the ages of 18 and 59 living here with a fixed income -- including foreign nationals -- to be subscribed to the NPS.
A person who gave birth to two children can have 12 months reduced from the aforementioned 10-year mandated subscription period and have 18 more months reduced for every subsequent child. The maximum childbirth credit is 50 months.
Mandated soldiers can have their mandated subscription period reduced by six months.
The government is currently trying to expand the childbirth credit to deduct 12 months for every child -- including the first one -- with no upper limit. The country is also mulling applying the military credit system to the entire service period of conscripted soldiers.
