Social Security Only 1.7752 Trillion Won Remaining

It has been forecasted that although there is still more than 60 trillion won account since it has not been paid in full-scale, the social security source will eventually run out, due to its structural problem of `small payment but big gain`.

And the government employee pension source is also running short since a large sum of the retirement pension has been paid off as the reconstruction took place after the 1998 financial crisis.

The Ministry of Finance and Economy reported such in their report sent to Millennium Democratic Party lawmaker Chung Se-Kyun for the government office inspection. Although there have been several cases, in which international organizations such as the International Monetary Fund (IMF) or the Organization for Economic Cooperation and Development (OECD ) had warned about the future status on Korea’s public pension source, it is first case that the government officially recognized the running out source.

According to the report, while the government gained 15.3005 trillion won for the social security including its interest profit, 13.6229 trillion won has been newly created after deducting 1.6776 trillion won for payment and operating cost. Currently, the total accumulated amount for the social security reaches at 60.6152 trillion won.

While the government employee pension gained 3.52 trillion won, it recorded a loss of 853.8 billion won after paying off 4.3832 trillion won. As more number of people retired, the government employee pension showed a loss of 1.4171 trillion won in 1998, and 2.1554 trillion won in 1999. Although the reserved amount of the government employee pension was 4.7884 up until 1998, only 1.7752 trillion won was reserved last year.

It has been unveiled that the profit from the four major public pension, including the social security, government employee pension, private school teachers pension, and military retirement pension, recorded a mere 2 percent gaining through stock investment from 1998 to last year. The total amount of direct and indirect investment, such as the mutual fund, was 11.9000 trillion won, and the profit was 240 billion won. However, if the loss from stock investment before 1997 is applied, the profit rate was – 2 percent. It has been known that the social security invested 1.9000 trillion won, the post office insurance invested 1.1000 trillion won, and the private school teachers pension 100 billion won into the stock market from last October to the end of July this year.

yhchoi65@donga.com