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KMID : 1124020100260040385
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Korean Social Security Studies
2010 Volume.26 No. 4 p.385 ~ p.411
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Effectiveness of Voluntary Participation in National Pension by Housewife
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Joo So-Hyun
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Abstract
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National Pension covers the first tier in the three-tier retirement income system. However, the current National Pension system contains regulatory and systematic loopholes and these loopholes produce retirement income insecurity for both participants and non-participants. For women, National Pension could provide the only retirement income source for later life however, due to the low participation rate and employment income, the pension benefit amount for women could be insufficient to cover the very basic retirement expenses. Full-time housewives are included in the largest group that does not have retirement income savings in any kinds. Systematically, full-time housewives are not required to participate in National Pension System and they are relying on their spouse’ pension scheme. However, families with one wage earner do not save enough for their retirement and the housewives of these families are in vulnerable position in retirement income security. The National Pension System allows full-time housewives to participate in the Pension as voluntary contributor. Current law requires voluntary contributor to pay the National Pension premium above the national average of the individual contributors to the System. This research tries to examine the effectiveness of voluntary participation in National Pension by full-time housewives using micro simulation modeling. The results of the simulations show positive effects of voluntary participation in National Pension by housewives in various income levels (50%, 100%, and 200% of the national contribution average). Based on the findings, allowing voluntary contributors to participate in National Pension with various levels of income is recommended to increase participation rate by housewives. To help acquire pension benefit eligibility of low income groups, providing premium support by the government could be considered.
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KEYWORD
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National Pension, Pension Loopholes, Voluntary Participation, Full-time Housewife, Retirement Income
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