Pension policy in South Korea
South Korea's pension scheme was introduced relatively recently, compared to other democratic nations.
[4] The South Korean tax and welfare system is the least effective in reducing inequality among OECD countries.
[4] The Basic Livelihood Security Programme (BSLP) is a welfare system that provides cash payments and other benefits, such as housing and education, for citizens living in absolute poverty.
To qualify, recipients must prove that they cannot receive possible assistance from family members, and must include their assets under the means testing and income criteria.
[1] It was extended in 2014 to provide monthly allowances of approximately $179 (200,000 South Korean won – KRW) to people over the age of 65 in the bottom 70th percentile of income earned.
[9] Those who have made a minimum of 10 years of contributions and who have reached the age of 60 are eligible for cover under a "reduced old-age pension" scheme.
[11] Basic old-age pension schemes cover individuals aged 65 and older who were earning below an amount set by presidential order.
[12] It was implemented in 2000 by the South Korea government in response to increasing unemployment and poverty resulting from the Korean financial crisis of 1997.
[13] The Korean government was still focusing on rapid economic development, and insufficient attention given to social welfare programs resulted in a weak safety net.
[14] Despite the revised poverty guideline, only 15% of seniors aged 65 and over received the National Basic Livelihood Security benefit, because of the eligibility requirements.
[17] The South Korean pension system was created to provide benefits to persons reaching old age, to families and individuals affected by the death of their primary breadwinner, and for the purpose of stabilizing the nation's welfare state.
[21] Anyone under the age of 18 is either a dependent of a person who is covered, or falls within a special exemption to which alternate provisions apply.
Employees between the ages of 18 and 59 are covered under the workplace-based pension scheme, and contribute 4.5% of their gross monthly earnings.
[18] The national pension scheme covers employees who work in companies employing five or more people; fishermen; farmers; and the self-employed in both rural and urban areas.
Employers are also covered under the workplace-based pension scheme, and help meet their employees' compulsory 9% contribution by providing the remaining 4.5%.
[23] The retirement allowance was given in the form of a single lump-sum payment, equivalent to one month of the base salary, for any employee who had worked for more than one year.
[25] The allowance, intended to serve in the absence of unemployment insurance, does not provide employees with enough benefits and security to cover their retirement needs.
[24] In 2016, the benefit coverage was expanded, with 5.4 million workers enrolled in the scheme, or 15% of the total working-age population (aged 15 to 64).
[23] The 2007 National Pension reform did not guarantee long-term financial solvency, but rather exacerbated the need for expansion of coverage.
[26] In combination with a gloomy social context post-2008, this resulted in a strong push in favour of free welfare in Korea, evident in the 2012 presidential election of Park Geun-Hye.
[34] South Korean government statistics showed that, in mid-2014, for the 15–29 age group the highest level of unemployment reached was 9.5%, for an employment rate not exceeding 41%.
[citation needed] This expansion of higher education was not anticipated by the job market, as the South Korean youth employment rate had remained at around 60% over the preceding 30 year period.
