Major public pensions and insurance, such as the national pension and health insurance, are expected..

The government explained that the four major public pensions, including the national pension, civil servants pension, private school pension, and military pension, are likely to be exhausted early due to changes in the demographic structure such as low birth rate and aging population.

First of all, the national pension is expected to turn into a deficit in 2048 and exhaust funds in 2064. The figures are seven and eight years behind the deficit conversion in 2041 and burnout in 2056, respectively, at the time of the long-term fiscal outlook in 2020.

This is the impact of the pension reform bill, which passed the National Assembly in March. The reform included raising the replacement rate from 40% to 43% and the premium rate from 9% to 13%. It will take effect in January next year.

It is analyzed that the private school pension will be turned into a deficit in 2026 and the fund will be exhausted in 2047. The timing of the deficit transition was three years earlier than the previous forecast (2029), but the timing of depletion was delayed by two years.

The government employee pension will have a deficit of 0.69 percent of the gross domestic product (GDP) as of 2065, up 0.36 percentage points from this year, and the military pension will have a deficit of 0.15% in the same year, up 0.07 percentage points from this year.

Health insurance and long-term care insurance for the elderly deteriorate rapidly

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Among public insurance, the financial situation of health insurance and long-term care insurance for the elderly will deteriorate the fastest.

In the case of health insurance, it is predicted that the deficit will be converted next year and reserves will be exhausted in 2033.

Long-term care insurance for the elderly (supporting households after reaching 8% premium rates) is also expected to turn into a deficit in 2026, and reserves are expected to be depleted in 2030.

However, industrial accident insurance and employment insurance are expected to maintain a stable fiscal balance in the long run. As of 2065, industrial accident insurance is expected to record a surplus of 0.26% of GDP and employment insurance of 0.18%.

Government “We need to respond to changes in demographic structure…”Reorganization is urgent”

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The government emphasized the urgent need to reorganize the financial structure of social insurance in response to changes in the overall demographic structure.

In the case of the National Pension Service, it proposed raising the return on funds by 1 percentage point from 4.5% to 5.5%, and raising the mandatory subscription age to reflect the increase in the number of employed people aged 60 or older.

The private school pension was presented as a task that needed to improve the problem of early receipt of retirement pensions in case of school closures and improve the return on fund management.

The government employee pension explained that the system needs to be improved reflecting its specificity, considering the problem of deteriorating fiscal balance due to the increase in pensioners and the military pension was excluded from the reorganization during the 2015 pension reform.

In the case of health insurance, it was also suggested that it is necessary to change the financial management structure by setting the premium rate first and then determining the price based on it.

Measures to reform long-term care insurance for the elderly were discussed to reduce spending and raise future reserves by curbing excessive use, using artificial intelligence (AI) care robots, and expanding home and non-face-to-face services.