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Transformations in economic security during old age in Korea: the implications for public-pension reform

Published online by Cambridge University Press:  07 June 2006

YOUNG-JUN CHOI
Affiliation:
Department of Social and Policy Sciences, University of Bath, UK.

Abstract

The South Korean National Pension scheme was instituted in 1988 and now covers all private-sector employees and the self-employed. Since the financial crisis of 1997, however, it has become controversial and is under considerable pressure, not least because of the perceived financial implications of the country's rapidly ageing population. Predictions of financial shortfalls or ‘unsustainability’ have prompted calls for severe ‘downsizing’ of the scheme. The debate on the reform of the scheme has been dominated by the need to respond to demographic change in ways that assist the national economy, invariably by reducing social expenditure. The debate, however, has given little attention to the social or welfare functions of the pension scheme, though the material insecurity of older people has been exacerbated by major changes in the labour market and the family. This paper details recent socio-demographic changes in Korea and discusses their implications for old-age security and pension reform. It argues that public-pension schemes should be developed to strengthen social protection against the insecurities of old-age, that intra-generational redistribution should be at the core of the reformed arrangements, and that the introduction of a comprehensive non-contributory pension scheme should be seriously considered.

Type
Research Article
Copyright
2006 Cambridge University Press

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