Korea's pension to run out faster on population decline

South Korea's public pension reserve is set to run out from 2055,
two years earlier than the previous projection, in the face of rapidly
changing demographics coupled with slowing economic growth, according
to officials on Friday.

http://www.koreaherald.com/view.php?ud=20230127000496

From my position this is no problem because I'll be sitting in an urn
on the mantelpiece by then. I'll be useful for gritting the path in winter,
that's about it.

Obviously the country needs younger workers to contribute to the fund.
However, this is problematic with the lowest fertility rate on the planet.

Na Kyung-won, a Korean MP, wanted to give loans of nearly 40,000,000won
to couples to start families. Interest rates would be zero with one child and
the loan completely written off with a second child. She was promptly fired
by other MPs.

Another idea is immigration. A coven of Korean MPs wanted to offer
immigration to between 2000~5000 foreigners. Wow, an amazing figure.
Canada wants immigration to be 500,000 for 2023. Haha.

I have already contributed to the manufacture of one new Korean. I rate
my chances of being naturalized at 0%. Way to go Korea!

Na Kyung-won, a Korean MP, wanted to give loans of nearly 40,000,000won
to couples to start families. Interest rates would be zero with one child and
the loan completely written off with a second child. She was promptly fired
my other MPs.

She didn't get fired because she thought of the idea, she did it because she attempted to go around the President and undercut whatever plan they were going to present. The story isn't as clear-cut as you think.

Just because Korea didn't follow her plan, doesn't mean they aren't trying anything.

Though as I have always maintained- this problem is not one easily solved by government action. It is the result of culture and lifestyle choices as well as structural employment factors that are shared across the developed world (hence why you see this phenomenon across the development world, especially in middle-class and above families). You even see it in the developing world as well. Basically, the combination of the university education model resulting in delayed employment, the reduction in blue-collar jobs and their social appeal, the availability of contraceptives, and the commonly held view that 30 and under is for partying and having fun (even up to 35) and you are going to get a massive reduction in fertility.

You want to see societies with high fertility? Go to ones where university is something that 80% of the population does not partake in, where most teenagers start some sort of career at 18, often as early as 16. Religiosity is high. Access to contraception is poor. And strong social pressure to start families ASAP, rather than use your 20-year old years for leisure. 

Even if the falling birth rate could be magically reversed overnight, that still wouldn't solve the problem for more than 20 years. That is when they would start contributing.

Some major changes are needed in the system. Increasing contributions, pushing retirement age higher and higher and injecting state funds into the pension that would be covered by increased taxes. Good luck hoping to retire at 68 or 70 and guessing whether you will get something back from your contributions and how long will you be able to receive it. For anyone under 40-45 years old now, it doesn't look very promising.

The Nagster's policy would change nothing  for reasons already mentioned. A lot of modern adults are hopelessly infantilized anyway so it's probably good that they're not reproducing).

But I would have thought that S "I'm a property genius, honest!" PQR might have used his Lotto millions to sire a few more kids. Some users on here seem to reckon they have nubile girlfriends, so there's no excuse.

im from one of the good countries where we get it all back in a lump sum when we walk out.  Others dont even contribute to it, or arent getting anything back.  So, who is this post for?   The geriatric Koreans who are perusing waygook in their free time looking to pick up a bit of insight?

im from one of the good countries where we get it all back in a lump sum when we walk out.  Others dont even contribute to it, or arent getting anything back.  So, who is this post for?   The geriatric Koreans who are perusing waygook in their free time looking to pick up a bit of insight?

I thought this would be quite obvious, considering how easy the math is. But
I'll spell it out more fully so you might be able to understand.

If you are living in Korea and were born after about 1975, then you should
be concerned about when you will be able to retire, how much your contributions
will be how much your benefits will be.

If you constantly cash out your your contributions you better hope mommy and
daddy don't blow the family wad before they die. (Or start saving now for your
retirement if you're American and have no national pension plan.)

I thought this would be quite obvious, considering how easy the math is. But
I'll spell it out more fully so you might be able to understand.

If you are living in Korea and were born after about 1975, then you should
be concerned about when you will be able to retire, how much your contributions
will be how much your benefits will be.

If you constantly cash out your your contributions you better hope mommy and
daddy don't blow the family wad before they die. (Or start saving now for your
retirement if you're American and have no national pension plan.)

the korean NPS is not my retirement plan.  it is a glorified savings account that i will cash out when i leave. I cant think of a single foreigner who is planning to retire on their monthy NPS savings when they turn 65...  Why would they stay in korea?  If you can cash it all out when you leave, (americans and canadians) then of course do that. If you can't...  (british, south africans, australians, new zoolanders, ...etc) then you dont have anything to worry about.

the korean NPS is not my retirement plan.  it is a glorified savings account that i will cash out when i leave. I cant think of a single foreigner who is planning to retire on their monthy NPS savings when they turn 65...  Why would they stay in korea?  If you can cash it all out when you leave, (americans and canadians) then of course do that. If you can't...  (british, south africans, australians, new zoolanders, ...etc) then you dont have anything to worry about.

Actually, it is not a savings plan. It is a retirement plan. When I turn 64
I will get an annuity of about 1.2 million won per month. Forever.

 

I will get 1.2 million won per month. Forever.

축하합니다!

or,   you could leave the country, and take all of the money that is in it out, invest it in something that earns some interest and be far better off.

or,   you could leave the country, and take all of the money that is in it out, invest it in something that earns some interest and be far better off.

With a large sum of cash in hand, the temptations of drugs and young thai women might be too much for some.

or,   you could leave the country, and take all of the money that is in it out, invest it in something that earns some interest and be far better off.

If I cashed out, I would get about 50,000,000won. These contributions were only
50% paid by me. The other 50% were paid by my employer. So, I paid in about
25,000,000won.

I will get about 1,200,000 a month for life at 64. So if I cashed out it would give me
money for: 50,000,000/1,200,000 = 41.6 months (Or about 3.5 years negating
any interest gains I might have gotten by cashing out.)

So this money would be gone by age 67 and a bit. Now do you begin to
understand? By not cashing out I get 1,200,000won a month until I die.
(Which I hope will be many years after 67.)

If I cashed out, I would get about 50,000,000won. These contributions were only
50% paid by me. The other 50% were paid by my employer. So, I paid in about
25,000,000won.

I will get about 1,200,000 a month for life at 64. So if I cashed out it would give me
money for: 50,000,000/1,200,000 = 41.6 months (Or about 3.5 years negating
any interest gains I might have gotten by cashing out.)

So this money would be gone by age 67 and a bit. Now do you begin to
understand? By not cashing out I get 1,200,000won a month until I die.
(Which I hope will be many years after 67.)

Are you sure about that? The numbers seem off.
Haven't you been paying into your pension for more than 25 years or something? You pay 80k-ish a month? At 4.5% that would put your salary around 20 million/year.
Your total contributions sound very low and no way that would give you 1.2 million a month.

*edit

This person contributes a helluva lot more but still expecting to get the same amount as you.
She pays around 200k a month. With the employer's 4.5% together, that is almost 5 million/year.

https://m.koreaherald.com/view.php?ud=20211128000126

a 43-year-old office worker, sees 400,000 won deduced from her monthly salary of some 4.5 million won. According to bills that she receives from the NPS, it is estimated that she will receive some 1.2 million won per month if she continues to make payments until she turns 60. She will start collecting the money only after she turns 65.

Are you sure about that? The numbers seem off.
Haven't you been paying into your pension for more than 25 years or something? You pay 80k-ish a month? At 4.5% that would put your salary around 20 million/year.
Your total contributions sound very low and no way that would give you 1.2 million a month.

*edit

This person contributes a helluva lot more but still expecting to get the same amount as you.
She pays around 200k a month. With the employer's 4.5% together, that is almost 5 million/year.

https://m.koreaherald.com/view.php?ud=20211128000126

a 43-year-old office worker, sees 400,000 won deduced from her monthly salary of some 4.5 million won. According to bills that she receives from the NPS, it is estimated that she will receive some 1.2 million won per month if she continues to make payments until she turns 60. She will start collecting the money only after she turns 65.

Your employer only has to pay until you are 60. However, you can still contribute
until you are 65. That is what I will be doing. It increases your benefits. I was also
adding my Canadian pension of 200,000won a month. So, Korean pension will be
around 1,000,000won.

“After all, it was a good bargain for me,” Lee said, doing the math to calculate how
much the pension has given him in excess of what he paid. So far, he has received
about 90 million won in total benefits from his total contributions of approximately
25 million won.

https://www.koreaherald.com/view.php?ud=20211128000126

“After all, it was a good bargain for me,” Lee said, doing the math to calculate how
much the pension has given him in excess of what he paid. So far, he has received
about 90 million won in total benefits from his total contributions of approximately
25 million won.

https://www.koreaherald.com/view.php?ud=20211128000126

Sure, because this dude had it good. Not that the 500k is enough for anything.
He didn't contribute much and could retire at the age of 60.
Younger generations have it a lot worse. Basically the younger you are, the more screwed. The contribution/payout ratio is getting worse and worse. Not to mention the ever increasing retirement age. 65? 68? or 70? The current system is doomed.

Anyways, your numbers were off:

All of this talk about pensions got me thinking, so I went to my local
pension office today. I talked to a very nice woman, who spoke perfect
English, and she explained the whole thing to me.

So far I have paid 41,929,480won into the scheme.

My employer only has to continue contributions until I am 60. After that
I have to pay the monthly premiums myself. But probably my boss will
continue.

If I stop paying premiums in 2025, at age 60 I will receive 668,340won/month
at age 64.

If I continue to pay premiums until 2029, at age 64, I will receive 782,990won/month

Not bad.

Anyways, your numbers were off:

Yeah, you could right. I haven't looked at the papers in a while. My calculations
could be off, but it is still a good deal.

One problem with taking the pension is the exchange rate in the future. It could be good, OK, bad or terrible. Then there's inflation to account for.

Take either the lump sum or the pension and SS in the US is going to ding you for that, subtracting it from whatever SS would normally pay you. I don't know about Canada or other countries.

One problem with taking the pension is the exchange rate in the future. It could be good, OK, bad or terrible. Then there's inflation to account for.

Take either the lump sum or the pension and SS in the US is going to ding you for that, subtracting it from whatever SS would normally pay you. I don't know about Canada or other countries.

I'm not really interested in joining any extreme Neo-Nazi group
in the US.

The exchange rate doesn't bother me because I am a lifer. The
only family of consequence I have is here.

Inflation is concerning. But that usually corrects itself

the exchange rate to usd is getting very good right now.
thinking of transfering a wad of cash into usd,   then if it ever hits that insane high of 1400 to 1usd, transfer it back to krw.  worked out that i could make 3 mil krw if exchanging between todays rate and 3 months previous' rate