World Bank2013-08-162013-08-162000-05-10https://hdl.handle.net/10986/15146Old age income security in Korea is at a crossroads. The traditional system of family support is giving way to formal retirement savings--most of it mandated by government. Government employees and private school teachers are obliged to participate in special occupational schemes that operate on a pay-as-you-go basis while private sector workers must contribute to the partially funded National Pension Scheme (NPS). Employers must provide retirement allowances, a retirement cum severance payment program whose obligations are largely unfunded. These schemes have evolved over several decades and are not based on clear targets for the level of mandated retirement income or sustainable payroll tax burdens. They currently pay benefits to a minority of older Koreans. This means that over the next few years only social assistance programs will have a significant impact on the incomes of the current elderly poor. This report presents several alternative reform options. These include reforms to some elements of the existing system as well as an integrated or systemic reform option. The proposed reform allows younger workers to opt out of the earnings-related portion of the NPS. The combination of a mandatory private pension scheme--which would replace retirement allowances--and a reduced public pension scheme would result in a reasonable replacement rate target. New entrants would be obliged to join this system while older workers would continue to be covered by the current scheme.en-USCC BY 3.0 IGOPENSION REFORMMANDATORY SAVING PROGRAMSPAYROLL TAXESSOCIAL SECURITYSOCIAL SECURITY LEGISLATIONSOCIAL SECURITY TAXESSOCIAL SECURITY SYSTEMSFAMILY ASSISTANCERETIREMENT BENEFITSRETIREMENT PROGRAMSRETIREMENT POLICYPAY-AS-YOU-GO SYSTEMSSEVERANCE PAYSOCIAL ASSISTANCE PROGRAMSPUBLIC PENSION SYSTEMSPRIVATE PENSION FUNDSLABOR FORCE PARTICIPATIONGOVERNMENT EMPLOYEESREPLACEMENT WORKERSPENSION SAVINGS PLANSPENSION TAXATIONPENSION COVERAGEPENSION FUNDS ADMINISTRATIONPENSION LAWPENSION VALUATION ACCOUNTINGACCOUNTING STANDARDSACCRUAL RATESAGEDAGINGANNUITYBARLEYBENEFIT FORMULABENEFIT PAYMENTCAPITAL MARKETSCDCERTAIN EXTENTCIVIL SERVICECONTRIBUTION RATECONTRIBUTION RATESDEFICITSDEFINED BENEFIT PLANSDEFINED BENEFIT SCHEMESDEPENDENCY RATIODIVIDENDSEARNINGS GROWTHELASTICITIESEMPLOYMENTEXPENDITURESFAMILIESFAMILY SUPPORTFINANCIAL MANAGEMENTFINANCIAL SECTORFINANCIAL SERVICESFISCAL POLICYGDPGROSS WAGESINCOME LEVELSINDEXATIONINSURANCE COMPANIESINTEREST INCOMEINTEREST RATESINTERNATIONAL ACCOUNTING STANDARDSINVESTMENT RETURNINVESTMENT RETURNSLABOR COSTSLABOR FORCELABOR FORCE PARTICIPATIONLIFE INSURANCELIFETIME EARNINGSLIVING STANDARDSMANDATESMANDATORY RETIREMENTMANDATORY SCHEMESMARKET DISTORTIONSMINIMUM BENEFITMORTALITYNEW ENTRANTSNORMAL RETIREMENT AGEOCCUPATIONAL SCHEMESPAYROLL TAXPAYROLL TAXESPENALTIESPENSION FUNDSPENSION PLANPENSION REFORMPENSION RESERVEPENSION RIGHTSPENSION SCHEMESPENSION SYSTEMPENSIONSPER CAPITA INCOMEPERSONAL PENSION PLANSPRIVATE PENSIONPRIVATE SAVINGSPRIVATE SECTORPUBLIC POLICYPURCHASING POWERRELATIVE VALUEREPLACEMENT RATEREPLACEMENT RATESRETIREMENTRETIREMENT INCOMERETIREMENT INCOME SECURITYRETIREMENT SAVINGSSAVINGS BEHAVIORSAVINGS INSTITUTIONSSECURITIESSOCIAL ASSISTANCESOCIAL INSURANCESUICIDETAX EXPENDITURESTAX RATETAX RATESTAX TREATMENTUNEMPLOYMENTVOLUNTARY PENSIONSWAGE HISTORIESWEALTHWORKERSWORKPLACEWorld Bank10.1596/15146