Personal pensions not big enough, survey says

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Personal pensions not big enough, survey says

When it comes to preparing for retirement, Koreans are saving only a third of the minimum amount of money into their personal pension programs they will need to meet their expectations, according to Samsung Life Insurance on Thursday.

Personal pension programs are becoming more essential in Korea, as many expect the national and retirement pension programs to be unable to provide a sufficient income after retirement.

Samsung Life Insurance’s retirement research center on Thursday released a survey of 20,000 people between the ages of 20 and 64 who subscribed to personal pension programs offered by private life insurers. The survey asked how much they add every month and how much they’re actually aiming to receive after retirement. The study assumed that the pension subscribers will get 70 percent of their monthly household income after retirement from their pensions.

The calculation was based on an average 35-year-old man whose current monthly income is 4 million won ($3,400) and expects to make 4.15 million won from pension programs. Considering consumer price inflation, he’s expected to receive 2.18 million won from the national pension and 910,000 won from a retirement pension when he retires.

This means the rest of his pension has to come from a personal program, and Samsung Life calculated that the man would need to put in an average 620,000 won every month for the next 20 years if he wants to start collecting his pension at 65.

However, the 35-year-olds surveyed appeared to be putting an average 190,000 won each month - only about 30 percent of the necessary funds.

A 40-year-old man in the same situation needs to put in 750,000 won a month for the next 15 years to meet the savings goal, but according to the survey, 40-year-olds were only putting away an average 210,000 won.

Samsung Life made the estimates last month, based on July’s appraised interest rate of 3.13 percent. Experts say people may have to pay even more per month if the low-interest rate basis continues.

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