Low birth rate's far-reaching impact: Sustainability of teacher pensions under threat
The impact of South Korea's demographic crisis is far-reaching, with one lesser-known consequence being the threat to the sustainability of the teachers' pension system.
As the school-age population shrinks and schools close, teachers are losing their jobs and becoming legally eligible for pension payouts much earlier than expected — sometimes as early as their 30s.
According to data released by the National Assembly Budget Office, 410 pension recipients became eligible prematurely due to school closures as of 2024. Among them, individuals in their 30s and 40s account for 16 percent.
It was the first time that the number of early recipients surpassed 400 since the pension program was introduced in 1975 as a mandatory scheme providing financial security for private school teachers and staff in Korea.
Of the 410, recipients in their 60s and older comprised the largest share with 196, followed by 149 in their 50s. The remaining 65 recipients were younger — 63 in their 40s and two in their 30s.
"The financial sustainability of the Teachers' Pension fund is already in question, and early pension payouts due to school closures will further strain future finances," a NABO official said.
Statistics Korea projections indicate the number of children ages 6 to 21 will decrease further from 6.97 million in 2025 to about 4.1 million by the early 2040s. After a slight rebound in the early 2050s, the decline will continue.
The NABO financial outlook warned that without systemic changes, the teachers' pension fund will run a deficit by 2028 and be depleted by 2042.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
4 hours ago
- Korea Herald
S. Korea adds 245,000 jobs in May, yet manufacturing, construction sectors remain weak
South Korea added more than 200,000 jobs for the first time in 13 months in May, but employment losses continued in the manufacturing and construction sectors, government data showed Wednesday. The number of employed people stood at 29.16 million last month, up 245,000 from a year earlier, according to the data compiled by Statistics Korea. It marks the first time since April 2024 that job growth exceeded the 200,000 mark and the largest on-year increase since then. May also marked the fifth consecutive month of job growth, following a brief decline in December, when the country posted a net loss of 52,000 jobs. Since then, the labor market has shown signs of steady recovery, with net gains of 135,000 jobs in January, 136,000 in February, 193,000 in March and 194,000 in April. Despite the overall growth, the manufacturing and construction sectors remained sluggish. The manufacturing sector, often considered the backbone of the South Korean economy, shed 67,000 jobs from a year earlier in May, extending its downturn to an 11th consecutive month. The construction industry also continued to struggle, losing 106,000 jobs last month to continue its decline for the 13th straight month. However, the pace of job losses in both sectors slowed compared with the previous month, the agency noted. The accommodation and food service industry also saw significant job losses, shedding 67,000 positions to mark the steepest decline since November 2021, the agency said. In contrast, several service sectors posted solid gains. Employment in public health and social welfare rose by 233,000, while the science and technology services sector added 117,000 jobs. Employment in wholesale and retail trade also increased by 18,000, marking a turnaround and the first on-year growth in 15 months. "The drop in employment in the accommodation and food service industry was largely driven by a sharp decrease in jobs at pubs and restaurants," said Gong Mi-sook, a Statistics Korea official. "The turnaround in wholesale and retail employment reflects a base effect from previous declines." May's overall job growth was largely driven by hiring among older adults. Employment among those aged 60 and older surged by 370,000 from a year earlier, while jobs for people in their 30s rose by 132,000. Notably, the number of employed people aged 60 and above surpassed 7 million for the first time, the agency said. In contrast, younger age groups saw notable declines. Jobs for people in their 20s fell by 124,000, while those in their 40s decreased by 39,000. Statistics Korea noted that these age groups are also experiencing population declines, contributing to the employment drop. The employment rate for people aged 15 and older rose 0.5 percentage point from a year earlier to 70.5 percent in May. However, the employment rate for those aged 15 to 29 stood at 46.2 percent, down 0.7 percentage point on-year. The number of economically inactive people declined by 22,000 from a year earlier to 15.7 million as of end-May. Among them, however, the number of people who reported being out of work simply to rest rose by 2.4 percent, or 56,000 people, according to the agency. (Yonhap)
Korea Herald
19 hours ago
- Korea Herald
Lee Jae-myung picks vice ministers for finance, foreign affairs, industry
President Lee Jae-myung on Tuesday filled six vice ministerial posts to pursue a speedy recovery from the economic crisis, ahead of his departure for Canada to attend the G7 summit next week. The nomination was aimed at safeguarding national interests by quickly deploying human resources amid economic recession in Asia's fourth-largest economy, the presidential office said. According to Lee's office, Lee named Lee Hyoung-il, commissioner of Statistics Korea, as the first vice finance minister. Lim Ki-keun, administrator of the Public Procurement Service, will serve as the second vice minister of the Ministry of Economy and Finance. Two vice-minister posts at the Ministry of Foreign Affairs were also filled. Park Yoon-joo, minister of the mission of South Korea to ASEAN, and Kim Jin-a, dean of the language and diplomacy division at Hankuk University of Foreign Studies, will serve as the first and second vice ministers at the Foreign Ministry, respectively. Moon Shin-hak, spokesperson of the Ministry of Trade, Industry and Energy, was nominated as the first vice minister of trade, industry and energy. Yeo Han-koo was also reinstated as the minister of trade, a vice-ministerial position. He served in the same position from 2021 to 2022 under the former liberal Moon Jae-in administration. Vice ministers in South Korea do not require a confirmation hearing at the National Assembly before their appointment to the posts. "We promise to restore the administration that suffered a rupture after (former President Yoon Suk Yeol's) insurrection in a speedy manner," Lee's spokesperson Kang Yu-jung said. "We will create a government capable of overcoming the (aftermath of) global protectionism." Meanwhile, the presidential office announced that public access to Cheong Wa Dae will be partially restricted from July 16 to 31 and fully suspended starting August, as preparations for relocating the presidential office from Yongsan back to the historic compound in central Seoul begin. The move marks a reversal of former President Yoon Suk Yeol's 2022 decision to vacate the site. Public visits to Cheong Wa Dae will resume once President Lee's office completes the transition. The presidential office added that Seoul has secured a budget of 25.9 billion won ($18.9 million) for the relocation procedures.
Korea Herald
2 days ago
- Korea Herald
Lee signals major stimulus to revive growth, fight inflation
Second supplementary budget expected to exceed W20tr, with focus on AI, industrial upgrades Korean President Lee Jae-myung ordered immediate measures to curb rising food prices on Monday, signaling his administration's intent to roll out fiscal stimulus to revive growth and fulfill his campaign pledge of raising the country's potential GDP growth to 3 percent. 'The people are suffering greatly because of rising prices,' Lee said while presiding over a meeting of his emergency economic task force in Yongsan, Seoul. 'I've heard prices have gone up significantly. Is it true that a single packet of ramyeon now costs 2,000 won ($1.50)?' Less than a week into his term, the newly inaugurated president faces the twin challenges of easing cost-of-living pressures and stimulating an economy mired in weak domestic demand. While headline inflation fell to 1.9 percent in May, its lowest in five months, thanks to declining global oil prices, food costs remain elevated. Prices for processed foods, including staples such as bread, chocolate, ramyeon, coffee and frozen food, jumped 4.1 percent from a month earlier, according to Statistics Korea. Vice Finance Minister Kim Beom-seok warned that prices for eggs and chicken could spike 'if we don't respond properly," due to an outbreak of highly pathogenic bird flu in Brazil, a key exporter of boneless chicken to Korea. Analysts say food companies held off on price hikes earlier this year in cooperation with the previous government, but began raising prices en masse during the political vacuum triggered by former President Yoon Suk Yeol's impeachment. Lee's emergency task force, established via executive order on his first day in office, June 4, held its second meeting Monday, bringing together economic aides; key ministers from the economy, industry and infrastructure portfolios; and officials from the Financial Services Commission. It was expected that the size of the second extra budget would be revealed at the meeting, but the government deferred the announcement. To achieve the administration's 3 percent potential GDP growth target, above the OECD's 2.02 percent forecast for 2025 and the Bank of Korea's 2 percent range for 2024-2026, the government is expected to rely on two main pillars: a second supplementary budget, and major investments in emerging industries such as artificial intelligence, paired with structural reforms to enhance industrial competitiveness. The ruling Democratic Party of Korea signaled the additional budget will total between 20 and 21 trillion won, following the 13.8 trillion won supplementary budget passed in May to support disaster recovery and bolster industries affected by US tariff tensions. 'Amid an unprecedented domestic demand slump, small business owners and the self-employed are on the brink of collapse,' said Democratic Party spokesperson Rep. Jo Seoung-lae. 'We urge the opposition to actively cooperate in the prompt passage of the supplementary budget to protect the people's livelihoods.' Investor sentiment appears to be shifting. Global banks are revising their growth outlooks for Korea upward from previously pessimistic projections. Barclays recently raised its 2025 GDP forecast from 0.9 percent to 1.0 percent, citing the likelihood of expansionary fiscal policy regardless of political leadership. Goldman Sachs increased its projection from 0.7 percent to 1.1 percent, estimating that a second supplementary budget equal to 1 percent of GDP could lift this year's growth by 0.3 percentage points. Citigroup economist Kim Jin-wook expects the upcoming stimulus package, estimated to be between 20 trillion and 35 trillion won, to boost total Korean Treasury Bond issuance for 2025 to between 227.1 trillion and 242.1 trillion won, significantly above the 2020–2024 average of 169.5 trillion won. 'Given the limited room for excess tax revenue and public funds, the second extra budget will likely be financed mostly through additional net treasury bond issuance,' Kim said.
