20 Years of Failure for the Retirement Pension — "It Must Be Refounded as a Fund-Type System to Rebuild the Pillar of Old-Age Income" (January 31, 2026)
- #연금특위
(Even though the pension committee established in the National Assembly is effectively dormant, the fact that the Special Committee on Pension Reform of the Democratic Party of Korea, the majority party in the Assembly, has continued since last year to hold pension-related forums entirely on its own somehow looks strange to us!)
Criticism has been raised that Korea's retirement pension system, twenty years after it took effect in December 2005, has lost its original function of guaranteeing old-age income and is being effectively left unattended. The point is that, in order to break down a dismal rate of return that falls even short of the inflation rate and a structure of high fees, the current contract-based system should be converted into a fund-based system and the state's public role should be dramatically strengthened.
Professor Jung Chang-ryul of Dankook University's Department of Social Welfare, who gave the presentation, stated that the retirement pension's cumulative return over the past 20 years came to only 2.07%, falling short even of the average inflation rate over the same period (2.3%).
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As a solution, introducing a fund-type retirement pension was proposed. Under the fund-type system, instead of individual companies or employees contracting with financial firms, a board of trustees involving labor, management and experts takes the lead and entrusts collective investment to professionals. Yoo Ho-seon, a Research Fellow at the National Pension Research Institute, proposed alternatives drawing on overseas cases. In Denmark's case, a retirement pension system covering the entire population and run by a non-profit organization has lowered annual operating costs to around 0.32% while still generating stable returns.
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Nam Chan-seop, Professor of Social Welfare at Dong-A University, put forward the plan under which labor and management would be in charge of operations while actual asset management is entrusted to the National Pension Fund Investment Management Office. The logic is that this would make it possible to dramatically raise returns by using the National Pension's unrivaled investment portfolio at low fees. In fact, Pureun Ssiat (Blue Seed) — the Small and Medium Enterprise Retirement Pension Fund, introduced for employees at enterprises with fewer than 30 workers — surpassed a cumulative return of 26% in just four years through integrated management under a public-fund approach, demonstrating its effectiveness, it should be noted.
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Ryu Je-gang, Policy Division Director of the Federation of Korean Trade Unions, stressed that short-term workers employed for less than a year, platform workers, and workers in special types of employment must be brought within the retirement pension system. To this end, a concrete blueprint for establishing a new Retirement Pension Management Corporation to systematically manage and support the old-age income of workers at small and medium enterprises and vulnerable workers was putforward, it was said.
https://n.news.naver.com/article/001/0015877197?sid=102
