Jakarta, CNBC Indonesia – National pension fund South Korea (ROK) predicted to run out in 2055, earlier than expected. Pension funds are dwindling faster due to a shrinking population amid low economic growth.
This can be seen from a report made every five years by the government panel tasked with estimating pension funds. They say the National Pension Service (NPS) will see its funds run out two years earlier than last forecast in 2018.
The NPS had 915 trillion won (Rp 11,120 trillion) in funds at the end of October 2022, the third largest in the world. This is equivalent to 42% of the estimated annual gross domestic product that year, according to official data cited CNA.
The fund will grow until at least 2040 because the relatively young pension system, launched in 1988, still has more contributions than payments. After that, the fund will shrink, according to the panel report.
President Yoon Suk-yeol, who has been in office since May 2022, has promised sweeping reforms of the national pension system with the aim of making it more sustainable. The panel’s findings will form the basis of the reform plan.
South Korea’s population has started to shrink since it peaked in 2020 at 51.84 million. The pace of decline is likely to accelerate due to the low birth rate, according to official data.
The number of babies born in Ginseng Country also hit a record low in November 2022. Data Statistics Korea cited Yonhap on Thursday (26/1/2023) there were 18,982 babies born in November, down 4.3% from the previous year. This number marks the lowest figure since 1981.
During the January-November 2022 period, a total of 231,863 babies were born. This is down 4.7% from a year earlier.
Her total fertility rate, the average number of children a woman has in her lifetime, was only 0.79 in the third quarter. In 2021, it stood at 0.81, marking the fourth year in a row it has been under one.
The figure is far lower than the replacement rate of 2.1 which would keep South Korea’s population stable at 51.5 million.
South Korea is beset by chronic birth declines as many young people delay or give up having babies. Their decision was triggered by economic problems and high house prices.
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