The latest financial projections of the National Pension and other occupational pension schemes have cast doubt on the sustainability of the public pension system. Public pensions are already beset by financial imbalances due to severe birth rate declines, population aging, and their payment structure where pensioners receive substantially more in benefits than they have paid in contributions. The civil servants’ pension and the military pension, their funds already depleted, have been running growing deficits despite the financial backing they have been receiving from the government. The National Pension and the private school teachers’ pension are on track to see their reserves depleted in 2055 and 2049, respectively.
The National Health Insurance and various social welfare programs implemented in the form of social assistance, having grown in expenditures as over time their target groups have expanded, face concerns over their financial sustainability. According to the Long-Term Financial Outlook for the National Health Insurance 2020~2060 of the Ministry of Economy and Finance, if its contribution rates remain capped at 8 percent and the level of government subsidy is maintained at the current level of 14 percent of the amount of anticipated contribution revenue, the National Health Insurance will see its surpluses accruing now turn in 2029 into deficits, which by 2060 will reach an estimated KRW5,765 trillion.
The basic pension is also a fiscal concern, as, amid the ongoing discussions about increasing its monthly benefit to KRW 400 thousand, it is expected that, with the rapid aging of the population, the number of its recipients will increase from 6 million in 2021 to 13 million in 2060. Against the background of rising social concerns regarding social security programs, including public pension schemes, and growing social demands for their improvement, this study revisits the current state of social security financial projections and explores options for improvement.