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  • VanIslander
  • Moderator LVL 1

    • 3016

    • June 02, 2011, 10:12:19 am
    • Seogwipo, Jeju Island
    more
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #20 on: January 14, 2022, 11:19:30 pm »
You can, just leave the country and cash it in lump sum.
That's a refund of contributions, not a monthly pension until death.

The question will be: Am I better off cashing out $22000 soon (that's how much I'd get about 65-72) or banking on making it to 79+ (double the early pay out).

Part of me thinks i could do better with the early refund, especially given the aging workforce, declining tax base, and volitile retirement age precedents in some other countries.

Part of me says stay pat.


  • gogators!
  • Waygook Lord

    • 5401

    • March 16, 2016, 04:35:48 pm
    • Seoul
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #21 on: January 15, 2022, 01:35:28 am »
That's a refund of contributions, not a monthly pension until death.

The question will be: Am I better off cashing out $22000 soon (that's how much I'd get about 65-72) or banking on making it to 79+ (double the early pay out).

Part of me thinks i could do better with the early refund, especially given the aging workforce, declining tax base, and volitile retirement age precedents in some other countries.

Part of me says stay pat.
Not quite--the money you and your employer have contributed has been invested and those earnings will be included in a lump sum payment.


  • SPQR
  • Hero of Waygookistan

    • 1075

    • March 08, 2018, 07:04:54 pm
    • Sierra Leone
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #22 on: January 15, 2022, 08:12:43 am »
Not very reassuring for those that reach retirement age after that.

Long before that the Korean government will have increased payroll
deductions more in line with other OECD countries.


Re: Korean pension may fail youth.... do you trust your pension?
« Reply #23 on: January 15, 2022, 12:24:41 pm »
The NPS was created during the boomer age.

The population was rapidly increasing and there were more people contributing than retiring.

Now in 2022 we have the exact opposite situation.  There will be significantly more and more retirees and drastically fewer contributions from working people into the NPS, as there are simply less young people enrolling in the program.

In 2021 the total student population including university students was less than 6 million. Itís decreasing yearly on average by 6-7%. There are simply less and less children being born.

NPS was founded in 1988 at a time when Koreas birth rate was around 1.55, the latest statistics from 2021 suggest a birth rate around 0.91.

Iíd suggest taking the lump-sum. The future does not look bright for the NPS. This situation will only deteriorate as the population continues to shrink.

T.C.



  • Lazio
  • Expert Waygook

    • 747

    • January 27, 2018, 03:56:10 pm
    • Gyeongi-do
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #24 on: January 15, 2022, 12:34:22 pm »
Long before that the Korean government will have increased payroll
deductions more in line with other OECD countries.

If only it was that simple.

The working ( contributing) population will keep shrinking. The demographic changes are inevitable. Not only that, but automatization will also take more and more jobs. In 40-50 years time life will be very different from today's.
The pension system as we know it now is not sustainable.


  • VanIslander
  • Moderator LVL 1

    • 3016

    • June 02, 2011, 10:12:19 am
    • Seogwipo, Jeju Island
    more
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #25 on: January 15, 2022, 01:59:42 pm »
Not quite--the money you and your employer have contributed has been invested and those earnings will be included in a lump sum payment.
Not quite. The lump sum payment includes an interest rate NOT the ROI of pension investments.


  • gogators!
  • Waygook Lord

    • 5401

    • March 16, 2016, 04:35:48 pm
    • Seoul
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #26 on: January 16, 2022, 03:10:36 am »
Not quite. The lump sum payment includes an interest rate NOT the ROI of pension investments.
Still more than what you originally posted. Would the interest rate by based on the ROI?


  • VanIslander
  • Moderator LVL 1

    • 3016

    • June 02, 2011, 10:12:19 am
    • Seogwipo, Jeju Island
    more
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #27 on: January 16, 2022, 03:17:52 am »
Yeah, there is an undetermined interest rate I'm entitled to if I get a lump-sum refund. I expect 1 or 2% given central bank rates. (So maybe another few hundred thou on my 22 mill.)

Would the interest rate by based on the ROI?
Nope. Interest rates are based on risks of investing, given out by banks and other loan institutions. A return-on-in-investment payment is based on profits of the organization, usually in the form of dividends if cash in hand.

« Last Edit: January 16, 2022, 03:22:21 am by VanIslander »


  • SPQR
  • Hero of Waygookistan

    • 1075

    • March 08, 2018, 07:04:54 pm
    • Sierra Leone
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #28 on: January 16, 2022, 01:46:48 pm »

Interest rates are based on risks of investing, given out by banks and other loan institutions.


Actually no. Interest rates are dictated by the central bank. They
decree the overnight rate which banks then use to formulate
prime rates.


  • pkjh
  • The Legend

    • 2194

    • May 02, 2012, 02:59:44 pm
    • Asia
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #29 on: January 16, 2022, 02:01:51 pm »
Actually no. Interest rates are dictated by the central bank. They
decree the overnight rate which banks then use to formulate
prime rates.
Banks are not generally required to follow central bank rates. However, if all the other banks do it...


  • gogators!
  • Waygook Lord

    • 5401

    • March 16, 2016, 04:35:48 pm
    • Seoul
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #30 on: January 16, 2022, 10:11:52 pm »
My combined contributions, when paid out in a lump sum, showed significant growth, more than I expected. But I worked at a private university.

But you seem to be saying that at a certain point a teacher's combined contributions go from earning just interest to earning the pension fund's ROI as a reason not to take the lump sum. Is that correct?

The few people who I know who decided to take the pension were quite dogmatic about it. But either way, one should consider the risk.


Re: Korean pension may fail youth.... do you trust your pension?
« Reply #31 on: January 17, 2022, 06:53:08 am »
I'm at a private university that uses the Korean Teacher's Pension Fund scheme.  As I understand it after 20 years the employer (and government?) contributions increase significantly, but the downside is that it's then locked in until you reach retirement age.


  • L I
  • Waygook Lord

    • 7168

    • October 03, 2011, 01:50:58 pm
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #32 on: January 17, 2022, 07:06:17 am »
Youíre close to the 20 year mark? Iíd say be happy about that. You donít want to take it out anyways. Forced savings for retirement is a blessing. Older folks proportionately vote more than the young, so their interests will always be given more weight.


  • SPQR
  • Hero of Waygookistan

    • 1075

    • March 08, 2018, 07:04:54 pm
    • Sierra Leone
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #33 on: January 17, 2022, 08:08:57 am »
The discussion is moot. The NPS is a fundamental part
of the Korean government and it will not be allowed to
fail. It would be utterly catastrophic if it did and would
put Korea back into the category of a developing country,
which it certainly is not.

Increased taxes, deductions and postponing the retirement
age will offset the demographic challenges.


  • gogators!
  • Waygook Lord

    • 5401

    • March 16, 2016, 04:35:48 pm
    • Seoul
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #34 on: January 17, 2022, 09:15:52 am »
The discussion is moot. The NPS is a fundamental part
of the Korean government and it will not be allowed to
fail. It would be utterly catastrophic if it did and would
put Korea back into the category of a developing country,
which it certainly is not.

Increased taxes, deductions and postponing the retirement
age will offset the demographic challenges.
That's all possible. They could also just print more money, which wouldn't matter so much if you lived in Korea, but your payments could take a hit if you lived overseas.


Re: Korean pension may fail youth.... do you trust your pension?
« Reply #35 on: January 17, 2022, 12:38:19 pm »
Youíre close to the 20 year mark? Iíd say be happy about that. You donít want to take it out anyways. Forced savings for retirement is a blessing. Older folks proportionately vote more than the young, so their interests will always be given more weight.

I'm at 12 years so still a way to go, but there's always a chance of moving back home in the mid term so wondering if it's worth holding on for a few years longer, at least until I hit 20 (assuming I'm not kicked out beforehand of course).


  • Liechtenstein
  • Hero of Waygookistan

    • 1728

    • February 15, 2019, 04:39:00 pm
    • NE Hemisphere
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #36 on: January 17, 2022, 04:13:13 pm »
Are there any restrictions on where you can live if you stay in Korea long enough to collect their pension? A friend of mine just moved to Uruguay which really does sound nice, from both what she has told me and what I have read.


  • gogators!
  • Waygook Lord

    • 5401

    • March 16, 2016, 04:35:48 pm
    • Seoul
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #37 on: January 17, 2022, 10:14:11 pm »
Are there any restrictions on where you can live if you stay in Korea long enough to collect their pension? A friend of mine just moved to Uruguay which really does sound nice, from both what she has told me and what I have read.
I have a friend in Portugal who is collecting it there.


  • hangook77
  • The Legend

    • 4847

    • September 14, 2017, 09:10:12 am
    • Near Busan
Re: Korean pension may fail youth.... do you trust your pension?
« Reply #38 on: Yesterday at 08:27:42 am »
I'd qualify in 2023, if I had paid into the pension fund. We made a choice yonks ago to look after our own retirement. Too much uncertainty with the goverment plan way back then. Looks like there still is.

Except most say that and then they don't invest for retirement.  They do nothing at all and end up with nothing, especially after hakwon and country hopping always cashing out.  (Not sure about your situation specifically if you are the exception to this rule.)


Re: Korean pension may fail youth.... do you trust your pension?
« Reply #39 on: Yesterday at 05:18:30 pm »
Except most say that and then they don't invest for retirement.  They do nothing at all and end up with nothing, especially after hakwon and country hopping always cashing out.  (Not sure about your situation specifically if you are the exception to this rule.)

You are probably right. Many people just don't get around to looking after themselves with regards to retirement. Thinking 'next year' I'll start, and next year turns into a new car, or an overseas vacation...
Luckily, this doesn't apply to me. My better half is pretty savvy with the earnings, and has invested wisely (I hope  :undecided:)