(Sejung Ilbo Report on the Unfunded Pension Liability of the National Pension) Even Assuming a 5.5% Return, the National Pension Fund Will Be Depleted in 2071 (Posted October 1, 2026)

(The National Pension financial projection data

submitted by the Ministry of Health and Welfare

leave out the years in which the deficit surges,

2094 and 2095.

Figures that exclude those two years

are problematic, as pointed out in the comments

of Special Committee Chairman Yoon Young-seok,

which are covered in detail

in a Sejung Ilbo article

that the Pension Future Forum is posting in the Press Coverage section

of its website.

Please refer to the attached website

for further details.)

(Excerpt omitted)

Nevertheless, the projected date

of fund depletion is extended by only seven years to 2071.

The cause is the structural deficit in pension finances in the later years: even under the 5.5% return scenario, the annual deficit between revenues and expenditures (at current prices) was shown to widen rapidly, to approximately 134 trillion won in 2060, 279 trillion won in 2065, 456 trillion won in 2070, and 493 trillion won in 2071.

 Even if several thousand trillion won in additional reserves are secured through higher returns, benefit expenditures grow much faster than contribution revenues, so the structure is such that even the additional fund is depleted within a short period.

 Chairman Yoon pointed out, "The fact that the fund's lifespan is extended by only seven years even if raising the return by 1 percentage point secures nearly 2,000 trillion won more for the fund in 2060 shows in numbers that the National Pension's fiscal problems cannot be solved by investment returns alone."

 In particular, Chairman Yoon said, "For President Lee Jae-myung to cite the growth in fund reserves as grounds for saying that 'there is no need to carry out pension reform for a considerable period' and even to bring up the political burden of pension reform reflects a very complacent view." He added,

"Pension reform is not a matter of weighing advantage and disadvantage for the administration in power, but a matter of the fiscal responsibility the state must bear toward future generations."

 He continued, "If structural reform is postponed now, the burden does not disappear; rather, future generations will only face a higher contribution rate and a heavier tax burden," and emphasized, "Recent strong fund returns must not be used as a justification for delaying structural reform."

Meanwhile, the long-term projection data that the Ministry of Health and Welfare submitted to Chairman Yoon left out two years in which the deficit between revenues and expenditures would exceed 740 trillion won.

The National Pension long-term projection data show its fiscal position over the next 70 years and put the deficit between revenues and expenditures in 2093 at 743 trillion won (at current prices);

2094 and 2095 are likewise regarded as all but certain to show deficits of a similar size, yet those two years were left out of the data submitted by the Ministry of Health and Welfare.

In this regard, Chairman Yoon said,

"If a long-term financial projection covering nearly 70 years omits precisely the years in which the fiscal deficit widens the most, that places considerable constraints on judging the projection's overall trend and fiscal risks," and pointed out,

"Data for all years must be disclosed without omission."

 In particular, the government's long-term economic assumptions apply a fund investment return of 4.5% for 2041–2060 and of around 4.4% even for 2061–2093.

 The problem is that after the National Pension's reserves pass their peak, it will be unable to pay pension benefits using only contribution revenues and must continuously withdraw from the accumulated fund.

During the accumulation period, assets can be held for a long time to wait for recovery even if a financial market crash occurs, but once the net withdrawal period begins, assets must be liquidated for pension payments regardless of market conditions.

 In that case, the sale of risk assets such as stocks and alternative investments, the build-up of cash-equivalent assets, and sequence-of-returns risk—the risk of having to dispose of assets during market downturns—may all grow.

 Chairman Yoon offered this assessment: "Until now, the unfunded pension liability of the National Pension has been discussed mainly on the basis of projections by the National Assembly Budget Office or by experts;

the government's direct, official submission of a figure of 1,447 trillion won and of its sensitivity to the rate of return is meaningful progress toward a transparent discussion of the true state of the National Pension's finances."

However, he said, "Assuming a 5.5% return, the accumulated fund in 2060 appears to be as much as 1,929 trillion won larger than under a 4.5% return, but actual fund depletion is delayed by only seven years."

"This shows that the fundamental problem of the National Pension lies not simply in low investment returns but in a structural imbalance between the population paying contributions and the population receiving pensions," he observed.

 In particular, he pointed out, "The assumption that high returns can continue to be achieved even in the stage where hundreds of trillion won of assets must be withdrawn every year after the fund peaks requires separate verification."

 Chairman Yoon said, "The need for structural reform does not decrease just because recent fund management performance has been good," and emphasized,

"The Lee Jae-myung administration must not stop at delaying the date of fund depletion by a few years based on optimism over returns, but must hasten discussions on substantial structural reform,

such as strengthening the long-term fiscal responsibility of the National Pension, reorganizing the multi-tiered pension system including the Basic Pension and retirement pensions, and strengthening the independence and professionalism of fund management."

https://www.taxtimes.co.kr/mobile/article.html?no=277126