SO ENDS THE ASIAN MIRACLE (via Tom Morin)

Don't Delay Pension Reform (Paul F. Gruenwald, May 23, 2003, Chosun Ilbo)

Korea currently faces some difficult decisions about reforming its National Pension System. As many readers know, the public pension system will come under increasing financial strain in the coming decades as the population ages rapidly; indeed, the OECD projects that Korea will age faster than any other industrialized country. While it is tempting to dismiss such concerns as being too distant, there is a strong case to act now. Delaying reform to future generations will only shift the burden of fixing the system, and then more drastic actions will be needed. The IMF urges the government to adopt gradual reform measures now to ensure a smooth transition to a financially sound pension system, and to ensure fairness across all generations of Koreans. [...]

There is widespread agreement that the finances of the National Pension Fund (NPF)in essence, the savings account of the NPS will deteriorate markedly in the coming decades as the Korean population ages. At present, the NPF runs an annual surplus equal to more than 2 percent of GDP, with accumulated assets of almost W100 trillion. However, these rosy numbers reflect the relative youth of Korea’s population. To conclude that all is well with the pension system would be a mistake. By the mid-2020s expenditures will exceed contributions, based on reasonable economic assumptions, and by the mid-2040s the financial resources of the NPF will be completely exhausted.

Ensuring the long-term solvency of the public pension system will inevitably require some combination of lower benefits and higher contributions.

Just wait until they try to reassimilate N. Korea. Posted by Orrin Judd at June 26, 2003 7:59 AM