Generation Z strongly against proposed reforms in national pension scheme

Generation Z strongly against proposed reforms in national pension scheme [Photo by Yonhap]

Generation Z, those that were born in the mid-1990s and early 2000s, is strongly opposed to the proposed reform of the national pension scheme, which is attempting to shift to a “pay more, get less” framework.

Following a fifth estimate of the finances at the National Pension Fund, the government and lawmakers are reviewing reforms of the pension scheme, to increase the premium from the current level of 9 percent and to hold off any benefits until later age. However, the younger generation, which will be directly hit by the changes, has strong objections to the older generation benefiting from the current pension structure, implying signs of a potential generational conflict.

Due to this, some are saying that the government will have to provide a sufficient explanation and ask Gen Z and the public for their consent to the reforms if it wants to pursue with the plan.

A recent survey concerning reforms at the National Pension Fund showed that members of Gen Z who agreed to the “pay more, get less” reforms accounted for only 9.4 percent of the respondents. The survey was conducted online by the Maeil Business Newspaper and the survey firm Metrix between Jan. 6 and 10, and queried 1,000 individuals born between 1995 and 2004.

The younger generation has strong objections to the older generation benefiting from the current pension structure [Photo by Lee Chung-woo]

“Gen Z thinks that benefits at a later age is more reasonable than a higher premium in the midst of gloomy estimates of the pension fund’s finances,” said the Korea Institute for Health and Social Affairs.

The survey results hint that the young do not think the National Pension Fund will be a social security net for their generation, given the accelerated aging of society and depleting National Pension Fund finances. According to the fifth financial assessment, the National Pension Fund will start seeing a deficit in 2041, and the balance will completely run dry by 2055. In other words, citizens born after 1990 may not have any pension benefits if the fund continues to be operated as it is now. According to the survey, 32.1 percent of Gen Z thought the age at which they receive their pension benefits and the retirement age should both be moved to after 70, instead of increasing the premiums. At present, pension benefits start at age 63, and the age will go up to 65 in 2033.

Gen Z clearly disapproves of the National Pension System itself. Among survey respondents, 20.6 percent believe that responsibility for one’s post-retirement years falls solely on the individual, and that the National Pension Fund should be abolished. About 18.8 percent said that there should be a cut in the benefits of the generation being benefited, while maintaining the current 9 percent premium. Another 17.2 percent believed that both the premium and the income replacement ratio should remain at the current level, at 9 percent and 40 percent, respectively. Some see Gen Z disapproval as a possible barrier in the reforms.