South Korea was found to have one of the least generous pension systems in the developed world, while suffering its highest rate of senior poverty, a report showed Sunday.
According to the Korea Labor Institute, the net replacement rate of the Korean elderly reached 45.2 percent as of 2011, about 10 percent lower than the average rate of countries in the Organization for Economic Corporation and Development. The net replacement rate is to the level of the post-retirement pension income compared to personal income before retirement.
A number of international labor-related organizations have recommended that countries keep the net replacement rate at around 70 to 80 percent to ensure elderly welfare. Among the 34 OECD countries, only four countries had lower rates than Korea: Japan, New Zealand, Ireland and the U.K.
Elderly men sit on steps at Tapgol Park in Jongno district, Seoul. (Bloomberg)
Korea had the highest elderly poverty rate in the OECD. The proportion of Korean over-65s in poverty was 48.6 percent, double the figure of Switzerland, which was second on the list. Israel and Chile followed next, with 20.6 percent and 20.5 percent, respectively.
The report also estimated that 74 percent of elderly Koreans who were in poverty lived alone.
As of 2014, Korea had some 6.4 million senior citizens, accounting for 15.1 percent of the population. This is 3.8 percent higher than that of 2012, the institute said.
Of these, only about 31 percent or some 2 million were employed, the institute added.
At the same time, the increasing growth rate of the elderly population was at the fastest pace with 4.1 percent, along with Germany and the U.S.
Japan, Germany and Italy have older populations than Korea with over 20 percent over the age of 65, while Mexico, Turkey and Chile had less than 10 percent, the report added.
“When the baby boomers retire soon, the elderly poverty problem will be much more noticeable amid the record-high elderly poverty rate with relatively low pension income,” said a KLI researcher. “A change in the Korean labor market is needed in order to accept those elderly employees.”
By Lee Hyun-jeong (email@example.com