Facing the challenge of aging population due to increasing life expectancy and low fertility, it is expected that pension cost of National Pension Scheme(NPS) will greatly increase threatening financial sustainability of the scheme. In order to improve the financial sustainability in the long term, NPS plans to conduct actuarial valuation in 2013. This study evaluates the financial status of NPS and suggests reform direction including appropriate contribution level with possible increase of contribution rate. For this purpose, the study conducts long-term financial
projection of NPS based on 2011 Population Projection by Statistics Korea. The study also examines contribution level of public pension in other countries along with their pension expenditure and pension fund compared to GDP. In consideration of inter-generational solidarity, the study adopts the deterministic overlapping generations model to analyze the impact of policy options of NPS on the economy and on the intragenerational and intergenerational well-being. Also, the studyconducts generational accounting of NPS in terms of tax and government finance.