KIHASA has published Health and Welfare Issue & Focus, No. 430, "The Old-age Income Security Effect of the New Contribution Subsidy Program for Individual-Based National Pension Participants." Its lead researcher is Jae-rin Ryu, associate research fellow at the Pension Research Center of the Department of Poverty and Inequality Research at KIHASA.

"The contribution subsidy program for individual-based National Pension enrollees is in too early a stage to to be assessed on the impact it will have had on old-age income security," Dr. Ryu said. "Furthermore, the subsidy program already seems to be in need of some improvement, despite its being a newly implemented program, for its low level of subsidy and insufficient maximum number of eligible months, raising concerns that the new support program is too meager to bring about any substantive impact."

Dr. Ryu conducted some simulations and estimates based on their results that the new National Pension contribution subsidy program may have some effect in extending the contribution payment period of the enrollees, but have meagre effect on raising the pension receipt rates and benefit levels. Furthermore, with the current target group of program beneficiaries remaining unchanged, Dr. Ryu says, measures such as raising the levels and receipt periods of the subsidy and raising the contribution payment resumption rates would not have much additional impact.

Dr. Ryu suggests that when revising the pension subsidy program, its subsidy period and subsidy level should both be raised. If only the subsidy period is extended, pension payments may not be raised above a certain level, and if only the subsidy levels increase, it may render unfairly larger benefits to the pension participants with a higher level of income. Expanding the target group of subsidy eligibility can also be a good solution to raising the policy effect of the new contribution subsidy program for individual-based pension participants, she emphasized.

Click here for the English translation of this issue.