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KMID : 1124020090250040365
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Korean Social Security Studies
2009 Volume.25 No. 4 p.365 ~ p.388
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Money`s Worth of the Pension Benefits in Workers` Compensation and Some Suggestions for a New Financial System
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Ma Seung-Ryul
Mun Sung-Hyun
Synn Jong-Wook
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Abstract
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The purpose of this paper is to analyze financial soundness of Workers’ Compensation related to pension benefits. For this, we calculated the ratio between the (present) value of pension benefits and that of the premium, and with this number in hand, we reviewed current financial system of the Workers’ Compensation. Workers’ Compensation functions as a social insurance program and as such, it is somewhat complicated to figure out the number. But we managed to derive the number with currently available data and the ratio turned out to be 3.94. It means that insurance premium covers only about 28% of the cost to pay the pension benefits and this undoubtedly is to works as one of the factors in bringing about financial unsoundness. To resolve the problem, we suggested that current financial system should be replaced with fully funded system. With the new system, considering characteristics of the Workers’ Compensation as one of the social insurance programs, increased premium rather that smaller benefits will be more desirable to fund future pension payments.
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KEYWORD
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Workers` Compensation Insurance, Pension Benefits, Premium, Financial Soundness
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