Reassessing the pension systemThe National Pension Service is the last resort for people preparing for their senior years. But a recent study predicts that the fund will be depleted by 2049, a whopping 11 years before 2060, when it was originally expected to dry up. If the study proves correct, a person who is now 20 years old will have no pension by age 57.
That rings a sharp alarm bell for the health of our pension system, which is gaining popularity among ordinary citizens as an effective way to prepare for their golden years. The problem will not only force our young generation to be skeptical about what happens to their taxes, but could also lead to the collapse of our social safety net.
According to the study by Park Yoo-sung, a Korea University professor of statistics, there is a critical statistical error in earlier studies that said the national pension fund would be exhausted by 2060, as the government has switched the system from the idea of “pay more, receive more” to one of “pay less, receive less” after hot debates among experts. Park attributes the statistical flaw to an overestimation of birth and mortality rates - two crucial factors in estimating how quickly the pension fund will be depleted - and an excessive underestimation of the number of people who would receive pensions at an early age. Simply put, the fiscal health of the pension system was overblown, Park argues. If his analysis is proven correct, the pension fund will dry up much earlier than expected.
The National Pension Service has refuted Park’s argument, saying that his analysis, too, is flawed so there is virtually no possibility that his prediction will hold true. Yet citizens can hardly put their anxieties aside. The government must determine if there were any errors in estimates of the original depletion date. Problems can only be corrected when all the facts are delivered transparently.
Luckily, the government is slated to review the fiscal soundness of the pension system next year. We hope that both the government and the National Pension Service will approach the issue accurately by taking all possibilities for error into account. The government must make the results of its calculation public and begin to reform the existing pension system if its previous estimates are proven wrong.
If the administration attempts to cover up any of the potential loopholes in the system, the problems will not disappear. Without the people’s trust, our national pension system will have no place to go.
with the Korea JoongAng Daily
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