ID :
181845
Fri, 05/13/2011 - 02:31
Auther :
Shortlink :
https://oananews.org//node/181845
The shortlink copeid
Korea should learn from Tokyo's pension troubles
(EDITORIAL from the Korea Times on May 13)Korea should learn lessons from young Japanese citizens revolting against their pension system. One out of every four Japanese people in the 20s is reportedly behind schedule in paying their premium for its national pension program. Their delinquency increased as premium will soon surpass the pension itself.
Pension subscribers in Japan fell to 58.2 percent of adults aged 20-59 in February, the lowest since World War II. Corporate pension members make up around 40 percent of all salaried persons, also a record low. The Japanese government is going all out to collect overdue premiums.
Many 20- and 30-something Japanese are purportedly reluctant to pay the premium. They think that their premium subsidizes the livelihood of seniors with little chance of receiving their due pension. This is an apparent side effect of a rapidly aging society accompanied by a low-birth rate.
More than 23 percent of the Japanese are aged over 60. Japan's population has fallen by 18,300 over the past year to 127 million. The reduction in population is feared to accelerate.
In 1961, Japan implemented a pension program without serious thought to the population trend.
Average Japanese pensioners receive 187 million yen, 40 million yen more than their premium payment. The young Japanese aged under 20 must pay 210 million yen in premiums, but would end up receiving 118 million yen in pension. This is a pyramid-style financial scheme, meaning the young are subsidizing the old. There is also skepticism over the deficit-ridden government's ability to pay pensions on schedule.
Koreans are nervous about Japan's pension problem, mainly because Korea copied the Japanese system in 1988.
In Korea, such a revolt against the mandatory pension system has not occurred yet. Young subscribers are usually on time in payments. Unlike Japan, Korea collects national pension premium based on income. The Korean system has a redistributive function, which is unavailable in Japan.
Many self-employed Koreans and even unemployed housewives in the 40s and 50s are joining the pension system. Only 5.4 percent of subscribers in their 50s are behind schedule in premium payments. Their belated subscriptions come from the realization that pensions exceed premiums.
About 20 percent of Korean pension subscribers in their 30s are overdue in payments. But the problem is the delinquency rate will rise when they realize cost will outgrow benefits.
The government should revamp the current pyramid-style pension system. The National Pension Service in Korea is the world's largest public pension with assets of $300 billion. It must be ahead of the times over what will happen a decade or two later.
The success of pension reform is contingent upon the population plan. Korea will soon become one of the world's fast-aging societies. Its birth rate is one of the lowest in the world. Unless Korea curbs the population downturn, it will be a matter of time before its pension scheme faces the same quandary Japan is currently experiencing. Fiscal discipline is also necessary to prepare for such a rainy day.
Pension subscribers in Japan fell to 58.2 percent of adults aged 20-59 in February, the lowest since World War II. Corporate pension members make up around 40 percent of all salaried persons, also a record low. The Japanese government is going all out to collect overdue premiums.
Many 20- and 30-something Japanese are purportedly reluctant to pay the premium. They think that their premium subsidizes the livelihood of seniors with little chance of receiving their due pension. This is an apparent side effect of a rapidly aging society accompanied by a low-birth rate.
More than 23 percent of the Japanese are aged over 60. Japan's population has fallen by 18,300 over the past year to 127 million. The reduction in population is feared to accelerate.
In 1961, Japan implemented a pension program without serious thought to the population trend.
Average Japanese pensioners receive 187 million yen, 40 million yen more than their premium payment. The young Japanese aged under 20 must pay 210 million yen in premiums, but would end up receiving 118 million yen in pension. This is a pyramid-style financial scheme, meaning the young are subsidizing the old. There is also skepticism over the deficit-ridden government's ability to pay pensions on schedule.
Koreans are nervous about Japan's pension problem, mainly because Korea copied the Japanese system in 1988.
In Korea, such a revolt against the mandatory pension system has not occurred yet. Young subscribers are usually on time in payments. Unlike Japan, Korea collects national pension premium based on income. The Korean system has a redistributive function, which is unavailable in Japan.
Many self-employed Koreans and even unemployed housewives in the 40s and 50s are joining the pension system. Only 5.4 percent of subscribers in their 50s are behind schedule in premium payments. Their belated subscriptions come from the realization that pensions exceed premiums.
About 20 percent of Korean pension subscribers in their 30s are overdue in payments. But the problem is the delinquency rate will rise when they realize cost will outgrow benefits.
The government should revamp the current pyramid-style pension system. The National Pension Service in Korea is the world's largest public pension with assets of $300 billion. It must be ahead of the times over what will happen a decade or two later.
The success of pension reform is contingent upon the population plan. Korea will soon become one of the world's fast-aging societies. Its birth rate is one of the lowest in the world. Unless Korea curbs the population downturn, it will be a matter of time before its pension scheme faces the same quandary Japan is currently experiencing. Fiscal discipline is also necessary to prepare for such a rainy day.
