Gov’t unveils plan to improve social insurance

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Gov’t unveils plan to improve social insurance

The government unveiled a set of measures to improve the sustainability and profitability of Korean social insurance programs on Friday.

The Ministry of Strategy and Finance said it plans to expand overseas investments by 2 to 3 percentage points every year and to invest more in local stocks, bond markets and real estate markets. The Finance Ministry said the government came up with the plan due to the low interest rate here in Korea and low profitability in general.

“We do understand that there are higher risks for overseas investing considering the uncertainties in the global market,” said Song Eon-seok, strategy and finance vice minister, on Friday. “But at the same time we have no other option but to gradually expand overseas investment in order to maximize profit and stabilize the social insurance system.” The four public pension programs consist of the national pension, government employees’ pension, military personnel pension and private school teachers pension. Among these, the government will increase the portion of overseas investments in three pension systems, only excluding the military one.

For example, the portion of overseas investments or alternative investments through the national pension will be raised from 28.6 percent in 2016 to about 40 percent by 2021. Overseas investments will include investments in foreign stock markets and bond markets. Alternative investments, which means investing in land or building, will also be increased. The government will expand the number of private experts who will manage risk factors for such investments.

The Finance Ministry will also strengthen the rules for managing pensions in order to minimize the cases in which people receive benefits unlawfully. In the case of the national pension, the government is currently considering 18 key factors before giving the national pensions, but will raise this to 22 areas.

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