Published : Nov. 28, 2017 - 09:53
South Korea's state-run pension fund has posted exponential growth since its inception about 30 years ago, but it still has a long way to go in order to serve its intended purpose, analysts said Tuesday.
South Korea adopted the state pension program in 1988 to guarantee income for the elderly after retirement, and to provide coverage for disabilities and surviving family members.
According to data from the National Pension Service, the number of subscribers to the National Pension Fund came to 21.67 million as of the end of June this year, compared with 4.43 million at the time of its introduction.
(Yonhap)
Thanks to efforts to expand coverage, 4.28 million people are eligible for payments from the state pension, compared with nearly 1,800 recipients in 1989.
The size of the state pension fund has also snowballed over the past three decades in tandem with a spike in the number of subscribers.
As of end-August this year, the NPS had 602.7 trillion won ($553 billion) under its management, making it one of the three biggest pension operators in the world. Investment returns amount to 288.5 trillion won or nearly 48 percent of the total.
The pension fund's assets are forecast to rise sharply down the road on the back of stable investment yields, with the amount likely to surpass 1,000 trillion won in 2022 and reach 2,561 trillion won in 2043.
Despite its rapid growth, watchers said the state pension fund is faced with several problems, including the low income replacement ratio and concerns over its sustainability. (Yonhap)