As population aging since the late-20th century has emerged as the most significant factor threatening the financial sustainability of public pensions, governments around the world have taken a wide range of reform measures, including changes in benefit formula and benefit indexation, new link between benefit levels and life expectancy, incentives for late retirement, etc. It is against such a backdrop of shrinking role of public pension that private pension has grown in popularity in the realm of old-age income security. Often, private pension is expressly considered part of the reform package, an option to help offset shortfalls stemming from reduced public pension benefits, but there are other times when it gets strengthened without policy intervention.
The National Pension’s adequacy as an old-age income protection system has been put to question ever since its benefit levels were reduced following the two rounds of reform―one in 1998 and the other in 2007. The 2007 reform of the National Pension was accompanied by the establishment of Basic Old-Age Pension, which later in 2014 was transitioned into Basic Pension. Earlier in 2005, the government had implemented the Employee Retirement Benefit Security Act. Also, the Korean government announced the cross-ministerial Private Pension Promotion Plan in 2014 in order to help buffer the impact of public pension retrenchment.
Private pension is regarded as a promising way to reduce the burden of public pension funding while still meeting an appropriate level of old-age income protection. However, some point out that strengthening private pension will not only not help ensure an appropriate level of old-age income protection, but also aggravate old-age income inequality. This study is aimed at examining public-private pension mix in selected countries and drawing implications for Korea.