Income gaps highlight need for retirement reform

On the day he was summoned to the company’s audit office, Kim Jun-bi, a pseudonym, said his hands were trembling. The issue arose from outside work unrelated to his main duties that continued to generate income after his retirement. The company launched an audit at the end of 2024 and dismissed him in early 2025 at age 51, nine years short of mandatory retirement. It later filed a separate lawsuit over additional side work during his tenure, and he paid fines by the end of 2025. In a phone interview, he said, “I’ve lost touch with my colleagues. I keep a low profile and live quietly now.” He said he still felt compelled to speak out. “After retirement, you are effectively shut out of the workplace for at least five years. My children are still young. How can I simply stay idle? I prepared by running small rental and lodging businesses. Is the government responsible for this income gap? Is it right to leave people to fend for themselves?”

The retirement age refers to the point at which employees are required to leave their jobs. South Korea is again debating whether to extend it. A 2013 legal revision raised the minimum mandatory retirement age to 60 from the customary 55 or 58. Thirteen years later, policymakers are weighing another increase to 65.

Legislative progress has been slow. The ruling Democratic Party of Korea had initially pledged to pass related legislation by the end of last year, but on Jan. 23 it postponed action until after the June 3 local elections, citing the need to gather broader input from stakeholders. Critics say the delay also reflects political calculations aimed at avoiding public backlash, though views differ depending on individual circumstances.

Younger workers oppose raising the retirement age, arguing it could reduce job opportunities for their generation. People born in the mid to late 1960s, who may see limited benefits from a gradual phase-in, call instead for a swift and uniform adjustment. Companies oppose the change because of higher wage costs, while nonregular workers say they are being left out and view the proposal as primarily benefiting regular employees.

Concerns have also been raised that extending the retirement age could lead to a later pension eligibility age. The International Monetary Fund has recommended raising the pension starting age to 68, but the South Korean government and ruling party have so far rejected that step. The National Assembly’s Pension Reform Special Committee reviewed a proposal to lift the pension age to 68 but dropped it earlier this year, citing excessive side effects and practical constraints. The issue remains unsettled. Kim Sung-ju, president of the National Pension Service, said on Jan. 29 that the pension eligibility age should rise in line with the retirement age. A delay in pension payments would place a heavier burden on nonregular workers.

Most OECD countries allow people to continue working until they begin receiving a pension. In some systems, there is no fixed retirement age, or workers can remain employed until they become eligible for benefits. South Korea stands out for leaving income gaps during this transition period largely unaddressed.

South Koreans were taken aback by the scale of protests in France over pension reform in 2023. Even though the reform delayed the pension eligibility age by just two years, effectively extending working years and increasing total payouts, public opposition was fierce. Many French citizens argued that the change would shorten the period they could enjoy good health after retirement. The debate there operates at a fundamentally different level.

The roots of South Korea’s income gap problem trace back to the 1998 national pension reform under the Kim Dae-jung administration, which set a plan to raise the pension eligibility age to 65 by 2033. Whenever legislation to extend the retirement age is introduced, familiar concerns resurface, including reduced job opportunities for young people and heavier corporate cost burdens, as seen during the 2013 debate.

The government should now make a firm policy commitment to align the retirement age with pension eligibility. Even if immediate implementation proves difficult, it is crucial to set out the principle and present a concrete timeline. Income security in old age is a core public welfare concern that should not be sacrificed to political ideology, pension fund strain or administrative convenience. A clearly defined framework would also enable transitional steps, including easing restrictions on side businesses, to narrow income gaps during the adjustment period.