Edited by Giuliano Bonoli and Toshimitsu Shinkawa
Chapter 10: Pension Reform in Korea: Conflict between Social Solidarity and Long-term Financial Sustainability
10. Pension reform in Korea: Conflict between social solidarity and long-term financial sustainability Yeon Myung Kim and Kyo-seong Kim INTRODUCTION There are four major public pension schemes in Korea; these are the Government Employees Pension Scheme, the Military Personnel Pension Scheme, the Private School Teachers Pension Scheme and the National Pension Scheme (hereafter NPS), of which the NPS is the largest in terms of the number of participants and accumulated funds. The history of the NPS goes back nearly 30 years to 1973 when the Park Chung-hee government (1962–79) enacted the National Welfare Pension Act (NWP). However, implementation of the NWP was delayed until 1988, mainly because of economic reasons such as the first oil shock and the ensuing worldwide recession. As the Korean economy rebounded and in the wake of the radicalization of distributional conflicts fuelled by democratic movements in the mid-1980s, the autocratic administration of President Chun Doo-hwan (1980–87) declared the implementation of the NWP in 1986. The government revised the original NWP on a more conservative basis and initiated a mandatory retirement scheme known as NPS in 1988 (National Pension Corporation, 1998a, pp. 121–123; Yang, 2000, pp. 106–115). The Korean NPS started from the beginning as an integrated occupational model covering all major groups such as white- and blue-collar workers, farmers, fishing people and the self-employed under a single umbrella. It was because there was no social basis to build up some cooperative or voluntary pension schemes by companies, labour unions or friendly...
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