(Dr. Shin Seung-ryong, KDI) Presentation Materials for the Advisory Committee to the 22nd National Assembly Special Committee on Pension Reform

Meanwhile, the plan to separate the pension system into old and new accounts, proposed by the state-run Korea Development Institute (KDI), is also being put forward as an alternative.

Earlier, the KDI had proposed keeping the fund built up from contributions already paid as the 'old pension,' while accumulating future contributions in a 'new pension' account. Under this plan, raising the contribution rate to 15.5% and accumulating it in the new pension would guarantee future generations a pension at an income replacement rate of around 40% without the fund running dry. 

Shin Seung-ryong, a research fellow in the KDI's Fiscal and Social Policy Research Department, pointed out at a policy forum titled 'The Desirable Direction for National Pension Reform' that unless the National Pension account is split into old and new accounts and the new pension for the younger generation is changed into a structure where 'you get back what you pay in,' any form of parametric reform can only be regarded as a 'Ponzi scheme.' 

Shin noted that some argue a similar fiscal effect can be achieved without separating the accounts, simply by raising the contribution rate and injecting some state funds, but he expressed concern that if the administration changes, the contribution rate could be altered or the state funding could be discontinued according to political needs, and stressed that keeping the accounts separate would guarantee future generations' pension benefits.

https://www.dailypop.kr/news/articleView.html?idxno=85965