▪ Background
▪ Major issues related to public pension reform
▪ Major countries have implemented parametric or structural reforms to ensure financial stability and thus secure the sustainability of their public pension schemes.
▪ Korea has also promoted parametric reform since the late 1990s to stabilize public pension finances. However, ensuring the sustainability of pension funds remains a significant challenge.
▪ Without any changes to the system, the fiscal balance of the four public pensions is expected to deteriorate from 1.76% of GDP in 2022 to -6.55% in 2070.
▪ If the premiums are increased to prevent depleting the national and private teachers pension funds, the public contribution at constant 2022 prices is expected to be 1,290 trillion won, a 20.4% increase from the 2070 baseline of 1,072 trillion won.
▪ The state compensatory grants per recipient of the civil servants and military pensions is anticipated to increase by 2.4 times, from 7.26 million won annually in 2022 to 17.54 million in 2070.
▪ Measures to stabilize public finances are needed to guarantee a minimum retirement income.
▪ It is necessary to discuss reforms that can leverage the benefits of parametric reforms and complement them in the medium to long term, given the fundamental difficulties in eliminating fiscal deficits.