More parents paying pensions for their children

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More parents paying pensions for their children

Korea’s national pension fund operator announced Sunday that the number of 18- to 26-year-old voluntary subscribers whose premiums are covered by their parents rose last year.

In a country where parenthood is often measured by how much financial assistance a couple provides to their children, and retired parents scramble to find another job to back up their children’s private education costs, the latest data revealed by the National Pension Service (NPS) shows how much parents are willing to help.

“Voluntary subscribers in their 20s are mostly unemployed, college students or military recruits,” said Jeong Jeong-tae, vice head of the Customer Support Department at the NPS. “They normally don’t have a steady income, so their parents are often the proxy payers.”

About 3,300 people aged 26 or younger signed up for the national pension system last year, up 6.7 percent from the year before. About 2,600 subscribers were male. People aged between 18 and 26 with no income are not obligated to subscribe.

“Back in 1995 when the service opened to farmers and fishermen, there were a lot of people who signed their parents up for the program,” said Kim Seon-gyu, director of NPS. “But in recent times, when the unemployment rate is high and the benefits of pensions have been highlighted, it’s more the other way around.”

Based on calculations by the NPS, under the current system, subscribers to the national pension system get back 1.8 times what they pay in, which is why many parents view the monthly premiums paid on behalf of their children as an investment for a better future.

One example is a 50-year-old father surnamed Lee, whose 21-year-old son recently joined the military. Lee said he decided to sign his son up for the national pension system.

“I think of it as an allowance,” he said, adding that he will pay 200,000 won ($180) per month for his son.

A woman surnamed Heo, who is unemployed but holds a master’s degree, said her father also pays her health insurance premiums. Although she has some health problems, the 26-year-old said she’s confident her situation will improve.

“When I find a job, my company will cover half of my national health insurance premiums,” she said. “And by that time, I think I’ll also recover from all my illnesses.”

Last year, the number of people in their 20s, whose subscription to the national health insurance system were covered by their parents, was also about 2.6 million, up 11.7 percent from 2007 and the highest since 2004.

In that same age group, the number of subscribers whose premiums were partly covered by their employer fell by 4.6 percent over 2007, reflecting rising unemployment among young people.

Under the current system, 6.07 percent of a worker’s monthly salary is paid into the state-run health insurance program, half of which comes from the employer.

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