Monday, July 18, 2011

Korea Ill-Prepared for Aging Population

Korea's population is aging faster than any other country, but a shortfall of state pensions and other factors mean that it is among one of the worst prepared nations to deal with the impact of this worrying trend.

According to a study by the Center for Strategic and International Studies, a U.S. foreign policy think tank, Korea ranked 19th out of 20 countries surveyed in terms of its Income Adequacy Index, the Ministry of Strategy and Finance said on Sunday.

The survey used two indexes -- Income Adequacy and Fiscal Sustainability -- to try and gauge how well prepared each country is to deal with its aging population.

Korea finished almost bottom of the list, one spot behind China and one ahead of Mexico. It only fared slightly better in the fiscal sustainability index, where it placed 12th. This index "takes into account the differing fiscal room that countries have to accommodate their growing old-age dependency burdens," the CSIS said.

Korea now finds itself in the same position as France and Italy, which also ranked poorly in both categories. These countries are struggling with a need to tap into their state funds to aid senior citizens who are not earning enough to support themselves, but are hobbled at present by their respective fiscal limitations.

According to CSIS, Korea will have to rely on its state coffers to support 45.9 percent of its senior citizens' income by 2040. However despite of such state support, this amount will still only equate to 79 percent of the average wage earned by middle-aged men, the center calculated.

Meanwhile, senior citizens' private pension funds require a boost as they only account for 3.2 percent of all their income at present. This compares poorly with Australia, which CSIS identified as a role model for other countries to aspire to, where 41.2 percent of elderly people's revenue streams come in the form of state support, while 23.7 percent are drawn from their private pension funds.

The report predicted that by 2040, elderly Australians will be able to see through their twilight years in relative comfort, as their private funds together with state support give them 20 percent more income than the amount earned on average by middle-aged men.

CSIS has advised Korea to boost its pension fund savings and bolster its social safety net to support senior citizens with financial troubles, while increasing the birthrate and allowing more people to immigrate to the country.
Link:http://english.chosun.com/site/data/html_dir/2011/07/18/2011071800943.html

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