[Open World] Why Structural Pension Reform Is Necessary (March 13, 2026)

(Today,
the 22nd National Assembly Special Committee on Pension Reform
Advisory Committee sixth session was convened.

One could not help but wonder whether a gathering of pension specialists
meeting in this way
was truly what it should be(!)

Until the very end,
such thoughts continued

to revolve in the author's mind.)

 

Korea's National Pension Obsessed with Investment Returns

Low Contribution Rate and High Benefit Rate Are the Root Cause

Time to Accelerate Reform by Drawing on Foreign Experience

 

Norway's Government Pension Fund Global (GPFG), the world's largest sovereign wealth fund, recorded a loss of 23.3% in a single year during the 2008 global financial crisis.

This means that of the National Pension Fund's reserves of 1,458 trillion won (as of end-2025), an amount equivalent to 340 trillion won would have vanished in a single year.

Yet Korea's National Pension recorded only a 0.18% loss in 2008. This is a telling example of how conservative fund management is not without its merits.

Prior to the outbreak of war involving the United States, Israel, and Iran, the view that 'fund investment is a cure-all'—that sound fund management alone, without structural pension reform, would resolve the problem—had gained considerable traction.

This was the backdrop for assertions that "there is no longer any need to worry about National Pension Fund depletion until 2090."

Given this atmosphere, it is worth paying close attention to Japan's Government Pension Investment Fund (GPIF) investment principle that "GPIF will not unnecessarily pursue high returns above all else."

The GPIF adopts an approach that prioritizes actuarial balance in the pension system over excessive exposure to investment risk.

Operating on this principle, Japan has secured pension financing for the next 100 years.

In order to arrive at an objective assessment of these contested issues, it is instructive to examine the cases of Norway, Canada, and Japan.

Norway, which manages the world's largest sovereign wealth fund at approximately 3,250 trillion won (21.3 trillion kroner as of end-2025), has a population of 5.62 million — holding per capita reserves roughly 20 times greater than Korea's.

Despite this, Norway operates a pension system that levies an 18.1% contribution rate while paying benefits of only 42% of wages. These figures were shared with the author by Dr. Herman Kruse of Statistics Norway — the body responsible for pension financial projections — at an OECD pension experts' meeting.

The Canada Pension Plan (CPP) charges an 11.9% contribution rate while paying 33.3% of earnings. Japan's National Pension and Government Employees Pension impose an 18.3% contribution rate while paying only 32% in benefits.

This stands in stark contrast to Korea's National Pension, which pays 43% while requiring only a 9.5% contribution rate, and to Korea's Government Employees Pension and Teachers' Pension, which pay more than 68% in benefits on an 18% contribution rate.

Last year, Norway's fund investment return was 15.1%, and Japan's was 16.25% (as of the end of the third quarter). The CPP recorded 7.7%, while the Netherlands' public pension fund (ABP) posted a loss of 1.6%. This illustrates that differences in fund investment returns reflect individual countries' economic environments more than their investment expertise.

Countries that hold far larger reserves than Korea and achieve higher investment returns nonetheless operate their pension systems differently from Korea.

This is because they pay lower benefits even while contributing at rates twice as high.

They have even introduced the 'automatic adjustment mechanism to absorb shocks during periods of declining fund investment returns' — a provision that was abandoned in last year's amendment to the National Pension Act.

Despite these circumstances, the National Assembly Special Committee on Pension Reform — established under the 22nd National Assembly precisely to carry out genuine structural reform — is not functioning as intended.

For the sake of the Basic Pension restructuring the government and ruling party seek to advance, as well as National Pension structural reform and the goal of establishing the retirement pension as a pillar of old-age income security, the time has come to accelerate pension reform in earnest.

Rather than persisting in the 'wishful thinking' that simply raising fund investment returns will suffice.

https://n.news.naver.com/article/081/0003625438?sid=110