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KMID : 1124020160320030159
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Korean Social Security Studies
2016 Volume.32 No. 3 p.159 ~ p.174
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An Analysis on the Intra-generational After-tax Income Redistribution Effect of the National Pension Scheme
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Lee Dong-Yeol
Choi Woong-Bee
Kim Woo-Chang
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Abstract
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The purpose of this paper is to investigate intra-generational after-tax income redistribution effect of the National Pension considering income tax deduction on premiums and taxation on annuity income. In this study, the pension holders are classified into two groups: workplace-insured and regionally- insured. Before-tax benefit-cost ratio and after-tax benefit-cost ratio along income level of pension holder are calculated and then compared accordingly. The main results are summarized as follows. Firstly, after-tax benefit-cost ratio decreases as income level increases until monthly income reaches about four million won. Beyond four million won, the ratio increases irregularly like sawtooth shape. Secondly, after-tax benefit-cost ratio of regionally-insured pension holder is much higher than that of workplace-insured pension holder and it can undermine against the fairness in long-term. Income redistribution is one of the most important roles of the National Pension, besides the National Pension aims to social integration. The current National Pension Scheme does contribute to the redistribution of income but it lacks in fairness. In conclusion, enhancement of intra-generational income redistribution effect of the National Pension and intensive examination about this issue are needed for the improvement of the system.
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KEYWORD
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National Pension, After-tax benefit-cost ratio, Intra-generational income redistribution
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