South Korea's Pension Crisis: President Yoon's Urgent Call for Reform

South Korean President Yoon Suk Yeol has announced urgent reforms for the national pension fund to ensure equitable income security for an ageing population. The fund, one of the world's largest, faces depletion by 2055. Yoon aims to restore trust and sustainability through increased contributions and differentiated rates.

South Korean President Yoon Suk Yeol on Thursday pledged urgent reform of the national pension fund, one of the world's largest with $830 billion of assets, to make it more equitable and to ensure income security for an ageing population. Yoon emphasized the loss of confidence in the pension system across generations and the need for fundamental and sustainable reform to restore trust among retirees.

"Now is the time to fundamentally reform the national pension system that has the confidence of neither the elderly nor the youth," Yoon told a press conference. He added that the contributions paid in must be increased to ensure the fund's sustainability and highlighted the necessity for differentiated rates between age groups to make the system more equitable.

Yoon noted that without these reforms, the pension system would continue to leave the elderly poor and the young people suspicious. South Korea's public pension fund, established in 1988, is currently the world's third-largest with 1,113.5 trillion won ($834 billion) in assets. Experts predict it will be exhausted by 2055 as payments begin to exceed contributions from 2041. The contribution rate into the pension scheme, mandatory for wage earners and business owners, currently stands at 9% of income, compared to higher rates in other OECD countries.

(With inputs from agencies.)