SEOUL, September 2 (AJP) - South Korea's elderly poverty rate could soar to more than 40 percent within the next 25 years if the current pension system remains unchanged, according to a government-affiliated research report disclosed on Tuesday.
The report, released last December by researchers at the National Pension Research Institute, projected that under the existing system, which sets the income replacement rate at 40 percent and the contribution rate at 9 percent, the elderly poverty rate will rise from 37.4 percent this year to 42.3 percent by 2050.
It also predicted that the "poverty gap," which measures the depth of poverty, will widen significantly, indicating that living conditions for poor seniors will worsen further due to demographic changes.
Researchers said that while the number of "young-old" seniors aged 65 to 74 is expected to decline, the proportion of "old-old" seniors aged 75 and older, who typically have lower income levels, is projected to rise sharply. This shift is seen as a key driver of widening income inequality among the elderly. The report said that those now aged 75 and older did not have sufficient time to participate in the national pension system, which was introduced in 1988.
According to birth and death results released by Statistics Korea in February, the country's total fertility rate rebounded for the first time in nine years to 0.75 in 2024, but it still remains less than half the OECD average of 1.51 as of 2022.
Rival political parties reached a bipartisan agreement on pension reform in mid-March, the first in 18 years, though it has been seen as a limited parametric reform, adjusting contribution and replacement rates rather than fundamentally changing the system. The reform aims to gradually raise the contribution rate from 9 percent to 13 percent by 2033, while the income replacement rate will be raised to 43 percent.
The government said the reform, combined with an increase in the investment return target for the pension fund from 4.5 percent to 5.5 percent, is expected to delay the projected depletion of the fund by 15 years, from 2056 to 2071.
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