Only 32% of elderly benefit from public pension system

Only 32 percent of South Korean senior citizens benefit from the public pension system, stoking concern over financial difficulties for the aged population, data showed Thursday.

The proportion of public pensioners aged 65 and older stood at 31.8 percent at the end of 2011, according to the data by Statistics Korea and the Financial Supervisory Service.

Beneficiaries of the National Pension Service accounted for 28.3 percent of the elderly, with 3 percent benefiting from the pension fund for civil servants and 0.4 percent receiving an annuity from the teachers’ pension fund.

Although the majority of the aged population is left out of the public pension system, the government is wary of spending more state funds to expand pension payments to senior citizens, given Greece’s fiscal crisis, market watchers said.

In addition, there is growing concern over the future finances of the public pension system, which will likely worsen when baby boomers retire, they added.

According to a recent parliamentary report, the NPS, the world’s fourth-largest pension fund, is expected to run out of money by 2053 due to the country’s low birth rate and aging population. As of the end of April, the NPS managed 367 trillion ($321.3 billion) won.

The insufficient public pension system has led to the rapid growth of the private pension market. The reserve fund of private pensions soared to 52 trillion won as of end-May, a whopping 42-fold increase from five years earlier.

Samsung Securities Co. predicted that the private pension market will likely grow 12 percent annually for the next 10 years.

In an effort to help ease the financial difficulties of retired people, the government should provide more tax breaks and expand basic pension payments for low earners, experts said. 

(Yonhap News)