I. Introduction

II. Overview of National Pension System

III. Analysis Methods

IV. Analysis Results

V. Conclusion and Policy Implications

Table of Contents

I. Introduction

II. Overview of National Pension System

III. Analysis Methods

IV. Analysis Results

V. Conclusion and Policy Implications

Summary

Korea is aging at such a rapid pace that it is expected to enter a super-aged society by 2025, when the number of people aged 65 and over will exceed 20% of the total population. At the same time, poverty among the elderly has emerged as a social problem, with the highest relative poverty rate among OECD countries. Expanding the pension system and activating the labor force participation of the elderly have been discussed as policy directions to respond to accelerating aging and poverty among the elderly.

Since the pension system is designed to maintain income after retirement from the main job, it may seem to contradict the policy of activating labor participation of the elderly. However, Korea is in a favorable environment to explore the coexistence of these two policies. First, pension benefits are not high enough to provide a livelihood. As of December 2022, the average old-age pension is only about 590,000 won, and private transfers from children are becoming less common. Second, unlike the elderly in the past, today's elderly have relatively high levels of education and good health, so they are highly capable and motivated to work, and they do not have much resistance to participating in the labor market. Therefore, it is reasonable to expand the pension system while promoting measures to activate the labor force participation of the elderly. It seems desirable to balance the pension system and the labor force participation of the elderly in such a way that the elderly who need additional income can easily participate in the labor market and earn income.