The rapid decline in fertility rate as well as the increase in life expectancy in Korea is expected to bring about a structural change in consumption, saving, and labor supply of households. Population ageing is also likely to increase uncertainty that households will face. The stochastic overlapping generations model, which is suitable for the analysis of households' behavior under uncertainty, is adopted to analyze the effects of pension reform and tax reform under population ageing. The results suggest that the inevitable transition from the current defined-benefit pension system to Pay-as-you-go system after the depletion of pension funds will result in a significant loss in social welfare. Gradual increase in contribution rate, therefore, is one of the policy options. Besides, overaccumulation of capital caused by population ageing is likely to reduce income, consumption, and labor supply of middle-aged households in the future. Capital income tax needs to be increased to avoid such overaccumulation.