Korea faced with W342tr pension liability

National debt is estimated to surpass 774 trillion won when it includes liabilities on pensions provided to former and incumbent civil servants and soldiers, according to a government report.

Among the debt, pension liability turned out to be 342 trillion won. It takes into account a calculated amount of pension that should be given to civil servants, soldiers and current workers in their retirement. The figure grew 36 percent from last year and took up 27.6 percent of the GDP.

The Finance Ministry handed in the 2011 Year-End Fiscal report carrying the data to the National Assembly. The report includes financial statements about the 51 governmental organizations for the first time this year as well as the usual revenues and expenditures.

The central government debt increased by 29 trillion won from the previous year to 402.8 trillion won, according to the report. The overall national debt also including local government debt marked 420.7 trillion won, a 0.6 percent increase compared to the previous year. It took up 34 percent of the GDP. Added with cover debts and unpaid bills, the total national debt made up 774 trillion won.

The Finance Ministry said that the pension liability, which takes up about 28 percent of GDP, is smaller than those of developed countries such as the U.S. which owes 39 percent, the U.K.’s 77 percent and Germany’s 41 percent.

“Financial risks will be more strictly managed by recognizing the potential debts including pension liabilities,” said ministry officials through statement.

According to the financial statement, the sum of national assets was 1,523 trillion won, and the net asset calculated without debt was 749 trillion won. Last year’s tax revenue was 270.5 trillion won, a 9.3 trillion won increase from the previous year. Annual expenditure last year marked 258.9 trillion won.

By Park Min-young  (claire@heraldcorp.com)