920 Trillion Won in the Fund, Yet 2,500 Trillion Won Owed … Subscribers May End Up Paying 30% of Their Wages in National Pension Contributions (January 26, 2022)

(This is the content of an interview conducted with Kookmin Ilbo on January 26, 2022. It is being posted here in order to emphasize that the amendment to the National Pension Act on March 20, 2025 was "an unprecedented deterioration" — a change for the worse that further increased the burden on the younger generation and future generations.

To elaborate: the amendment imposed an even greater burden on future generations than was already projected at the time of this interview, which is precisely why the 2022 interview is being posted here!)

— The report by the Korea Economic Research Institute projecting that "the National Pension will turn to deficit in 2039 and be depleted in 2055" was based on data published by the National Assembly Budget Office two years ago. That timeline is earlier than the Ministry of Health and Welfare's projection of "a deficit in 2042 and depletion in 2057."

"The 2057 depletion date was calculated on the assumption of a total fertility rate of 1.3 or above (1.32 in 2030, 1.38 in 2060). The actual fertility rate was 0.84 in 2020, was projected to be in the 0.7 range last year, and is expected to fall below 0.7 this year. Even the 2055 depletion estimate reflects the 2019 new population projections and is therefore out of step with current conditions."

— Does that mean the projected depletion date will be brought forward further once the data are updated?

"That is what the various indicators suggest. If pension reform is not carried out, the cumulative deficit of the National Pension will reach 17,000 trillion won by approximately 2088, when the generation born in 1990 will be passing away. Under current economic, demographic, and social variable assumptions, it would exceed 20,000 trillion won."

— The figure of 20,000 trillion won is difficult to grasp intuitively. What is the actual fiscal condition of the National Pension?

"The National Pension Fund currently exceeds 920 trillion won in accumulated reserves. However, this amount is merely the tip of the iceberg visible above the waterline; submerged beneath it is 2,500 trillion won in future benefit obligations promised to the insured. This means the current shortfall exceeds 1,500 trillion won. Germany, Sweden, and Norway have all shifted to systems in which contributors receive benefits commensurate with what they have paid in, but South Korea remains committed to a defined benefit arrangement in which a fixed payout level has been promised — one under which the National Pension is designed to pay out approximately twice the amount of contributions paid in. The National Pension's latent liability (its unfunded liability) is growing by more than 400 billion won per day."

https://www.google.com/amp/s/www.kmib.co.kr/article/view_amp.asp%3farcid=0016708248