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KMID : 1124020220380010005
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Korean Social Security Studies
2022 Volume.38 No. 1 p.5 ~ p.50
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Government subsidies to occupational pension funds of small-and-medium-sized enterprise employees and their consequences on old-age incomes of these employees in Korea
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Choi Hyun-Tae
Park Sang-In
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Abstract
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In the paper, we propose a policy that subsidizes the contributions to occupational pension funds of small-and-medium-sized enterprise (SME) employees. Then using a hypothetical risk biographies’ method, we evaluate old-age income levels of SME employees between generations in Korea. Under the current system, the old-age income levels of the employees who were born in 1970 or 1980 are below the lower limits of sufficient income replacement rate(53%). However, if the government subsidizes the occupation pension funds of SME employees by 4.17%, almost all employees’ old-age income levels will be above the upper limits(71%) of sufficient income replacement rate. Furthermore, if the government subsidizes with the monthly income ceiling of 3.30 million KRW, the income polarization does not be worsened with a similar effect on income replacement rate.
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KEYWORD
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subsidy policy, hypothetical risk biography, old-age income level, occupational pension, small-and- medium-sized enterprise
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