Institute for Economic Studies, Keio University
Keio-IES Discussion Paper Series

Income Redistributive Effects of South Korea's 5th
National Pension Reform Plan:
Focusing on Disparities in Contribution Period andLife Expectancy across Income Class
Jeonyong Park
30 May, 2024
DP2024-013
https://ies.keio.ac.jp/en/publications/23854/

Institute for Economic Studies, Keio University
2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan
ies-office@adst.keio.ac.jp
30 May, 2024

Income Redistributive Effects of South Korea's 5th National Pension Reform Plan: Focusing on
Disparities in Contribution Period and Life Expectancy across Income Class
Jeonyong Park
Keio-IES DP2024-013
30 May, 2024
JEL Classification: D31, H23, H55
Keywords: National Pension reform, Income Redistribution, Intragenerational Income Redistribution,
Mean Log Deviation (MLD), South Korea
Abstract
This paper aims to evaluate the income redistributive effects of various reform proposals underSouth Korea’s 5th National Pension Comprehensive Plan (Draft), announced by the Ministry of Healthand Welfare on October 30, 2023. By conducting a simulation analysis, the study examines thereform proposals from the perspective of the income redistribution function that has been
embedded in the design of the National Pension System since its inception.
Using panel data from the Korean Labor & Income Panel Study (KLIPS) spanning from 1998 to
2021, we estimate the lifetime income of individual enrollees and calculate their total pension
contributions. Simultaneously, we determine the pension benefit period based on the gender andcohort-specific life expectancies derived from the future life tables provided by Statistics Korea.
Subsequently, we estimate the total pension benefits. The Mean Log Deviation (MLD) is calculated asa measure of income inequality to assess how each reform proposal (from Reform Proposal 1 to 6)
affects income redistribution compared to the current system. Additionally, we perform a separate
analysis that incorporates the disparities in contribution period and life expectancy among different
income classes, reflecting the real-world inequalities in these aspects.
When evaluating the income redistributive effects of each reform proposal by employment type(regular employees, non-regular employees, and the self-employed), assuming a 20-year
contribution period for all enrollees, all reform proposals—including those involving increased
contribution rates (Proposals 1, 2, and 3), adjustments to the rate increase speed (Proposal 4), andraised the pensionable age (Proposals 5 and 6)—demonstrated improved income redistribution.
However, when reflecting the income disparities by income bracket in contribution period and life
expectancy, proposals to raise the pensionable age resulted in deteriorated income redistribution
across all employment types. This outcome is attributed to the exacerbation of intragenerational
income redistributive effects.
Based on these analysis results, it is confirmed that while the Korean government’s proposed
National Pension reforms—aiming to maintain long-term fiscal balance by increasing contribution
rates, adjusting the speed of rate increases by generation, and raising the pensionable age—differ intheir income redistributive effects under the same fiscal goal. Particularly, raising the pensionable
age could potentially worsen income redistribution for enrollees across all employment types.
Jeonyong Park
Graduate School of Economics, Keio University
2-15-45 Mita, Minato-ku, Tokyo 108-8345, Japan
parkjy77@keio.jp
Acknowledgement: In the course of writing this paper, I have received substantial support andguidance from many individuals. I would like to express my heartfelt gratitude to Professor Takero
Doi (Department of Economics, Keio University) for his continuous research advice and mentorship. I
am also deeply thankful to Professor Kimiko Terai (Department of Economics, Keio University) andProfessor Futoshi Ishii (Department of Economics, Keio University) for their insightful comments
during the graduate seminar sessions.

Income Redistributive Effects of South Korea's 5th
National Pension Reform Plan:
Focusing on Disparities in Contribution Period andLife Expectancy across Income Class*

Jeonyong Park†

Abstract
This paper aims to evaluate the income redistributive effects of various reform proposals
under South Korea’s 5th National Pension Comprehensive Plan (Draft), announced by
the Ministry of Health and Welfare on October 30, 2023. By conducting a simulation
analysis, the study examines the reform proposals from the perspective of the income
redistribution function that has been embedded in the design of the National Pension
System since its inception.
Using panel data from the Korean Labor & Income Panel Study (KLIPS) spanningfrom 1998 to 2021, we estimate the lifetime income of individual enrollees and calculate
their total pension contributions. Simultaneously, we determine the pension benefit
period based on the gender and cohort-specific life expectancies derived from the future
life tables provided by Statistics Korea. Subsequently, we estimate the total pension
benefits. The Mean Log Deviation (MLD) is calculated as a measure of income inequality
to assess how each reform proposal (from Reform Proposal 1 to 6) affects income
redistribution compared to the current system. Additionally, we perform a separate

In the course of writing this paper, I have received substantial support and guidance frommany individuals. I would like to express my heartfelt gratitude to Professor Takero Doi(Department of Economics, Keio University) for his continuous research advice andmentorship. I am also deeply thankful to Professor Kimiko Terai (Department of
Economics, Keio University) and Professor Futoshi Ishii (Department of Economics, Keio
University) for their insightful comments during the graduate seminar sessions.
†Ph.D. student, Graduate School of Economics, Keio University*

1

analysis that incorporates the disparities in contribution period and life expectancy
among different income classes, reflecting the real-world inequalities in these aspects.
When evaluating the income redistributive effects of each reform proposal by
employment type (regular employees, non-regular employees, and the self-employed),assuming a 20-year contribution period for all enrollees, all reform proposals—including
those involving increased contribution rates (Proposals 1, 2, and 3), adjustments to therate increase speed (Proposal 4), and raised the pensionable age (Proposals 5 and 6)—
demonstrated improved income redistribution. However, when reflecting the income
disparities by income bracket in contribution period and life expectancy, proposals toraise the pensionable age resulted in deteriorated income redistribution across all
employment types. This outcome is attributed to the exacerbation of intragenerational
income redistributive effects.
Based on these analysis results, it is confirmed that while the Korean government’s
proposed National Pension reforms—aiming to maintain long-term fiscal balance byincreasing contribution rates, adjusting the speed of rate increases by generation, andraising the pensionable age—differ in their income redistributive effects under the same
fiscal goal. Particularly, raising the pensionable age could potentially worsen income
redistribution for enrollees across all employment types.

Keywords : National Pension reform, Income Redistribution, Intragenerational Income
Redistribution, Mean Log Deviation (MLD), South Korea

JEL classification : D31, H23, H55

2

1

Introduction

The environment surrounding public pension system of South Korea (hereinafter, Korea)
is exceedingly challenging. This is primarily due to the rapidly increasing old-age
dependency ratio1, severe low birth rates2, and high elderly poverty rates3. Amidst these
conditions, the National Pension, which forms the backbone of Korea's public pension
system, has been the focus of serious reform discussions since August 2022. On October30, 2023, the government announced its 5th National Pension Comprehensive Plan
(Draft) (hereinafter, 5th National Pension Reform Plan), which has since been submitted
to the National Assembly. However, the 5th National Pension Financial Estimate
Results, released in March 2023, involves strong assumptions about individual enrollees,lacking detailed consideration of the income distribution among individuals.
This paper aims to address these limitations by conducting an empirical analysis thatemphasizes the income redistribution function embedded in the National Pension
System since its inception. By focusing on the income redistributive effects, we intend toevaluate the impact of the proposed 5th National Pension Reform Plan on bothintergenerational and intragenerational income redistribution, considering theheterogeneity of individual enrollees by gender, employment type, and income class.
The paper proceeds as follows: Chapter 2 introduces the current state of Korea's
public pension system and reviews relevant literature. Chapter 3 describes the data andestimation methods. Chapter 4 presents the simulation analysis of the income
redistributive effects of the current National Pension System and each reform proposal,
evaluating them from the perspective of income redistribution. Finally, Chapter 5
summarizes

policyimplications

based

on

the

analysis

results,

providingrecommendations for advancing the 5th National Pension Reform Plan.

1 The ratio of the working-age population, who support the pension system, to the elderly
receiving pensions. According to the OECD, Korea's old-age dependency ratio is projected toreach 72.4% by 2050.
2 Korea's total fertility rate recorded 0.78 in 2022 (Korean Statistical Information Service,"2022 Birth Statistics"), and it fell to 0.7 in the third quarter of 2023 (Korean Statistical
Information Service, "Population Trends, September and Q3 2023").
3 In a survey of elderly poverty rates (ages 66 and above) released by the OECD in
November 2019, Korea had the highest rate at 43.4%, more than three times the OECDaverage of 13.1%. Among the surveyed countries, only Korea, Latvia (39.0%), and Estonia(37.6%) exceeded 30%. Japan recorded a rate of 20%.

3

2

Current Situation Analysis

2.1 Korea's Public Pension System
Korea's public pension system is composed of four primary components: the National
Pension, and the special occupational pensions for government employees, private schoolstaff, and military personnel, as illustrated in Figure 2.1. The National Pension was
introduced in 1988, individual pensions in 1994, retirement pensions in 2005, and the
Basic Pension in 2014, establishing a multi-layered old-age income security system(Figure 2.2). The primary mechanisms for providing old-age income security are the
Basic Pension 4 , the National Pension, and the National Basic Livelihood Security
System, which offers public assistance. Despite the development of the Basic Pension,
retirement pensions, and individual pensions (such as housing and agricultural land
pensions), there is still a need for clearer role distribution among these systems andenhancement of each system's functionality (Ryu, 2022).
In August 2022, under the Ministry of Health and Welfare 5 , the 5th Financial
Accounting Committee was established. Following this, the results of the 5th National
Pension Financial Estimate Results 6 were announced in March 2023, and the 5th
National Pension Reform Plan was formulated and submitted to the National Assemblyin October 2023, marking the start of substantial reforms.
Figure 2.1. Overview of Korea's Public Pension System
National Pension

Special Occupational Pension
Government Employees Pension

Private School Teachers Pension

Military Pension

Year of introduction

1988

1960

1975

1963

Basis

NATIONAL PENSION ACT

PUBLIC OFFICIALS PENSION ACTTEACHERS PENSION ACTMILITARY PENSION ACT

Applicable subjects

Citizens aged 18 to 59

Civil servants, judges,
police officers

Private school teachers(including hospital staff)

Career soldiers

Ministry of Education(Teachers Pension Service)

Ministry of National Defense(Welfare Division Military
Pension Department)

System management

Ministry of Health and Welfare(National Pension Service)

Ministry of the Interior and Safety(Public Officers Pension Service)

Source: Compiled by the author from the Korea Institute for Health and Social Affairs (2018)

4 The Basic Pension, initially introduced as the "Basic Old-Age Pension" in 2008, wasconverted to the "Basic Pension" in 2014. It is provided to the bottom 70% of elderly
individuals (6.24 million in 2022), with a base amount of 323,000 KRW as of 2023.
5 The Ministry of Health and Welfare is Korea's central administrative body responsible for
welfare, social security, public health, and medical affairs.
6 Conducted every five years since 1998 to evaluate fiscal soundness and guidedevelopment, the National Pension Financial Estimate Results includes a comprehensive
plan submitted to the National Assembly following presidential approval.

4

Figure 2.2. Korea's Multi-tier Old Age Income Security System
Self-employed
3rd tier

Earned income workers

Civil servants, etc.

Private Pension (2.35 million people, 7.6%) ※ '21.12
Retirement Pension(6.84 million people,
22.3%) ※ '21.12

2nd tier

1st tier

National Pension(22.5 million people, 73.3%)

0th tier

Basic Pension(6.24 million people)

Occupational Pension(1.81 million people,
5.9%)

Source: Compiled by the author from the Ministry of Health and Welfare's "The 5th National Pension
Comprehensive Plan (Draft)," p.3
Notes: The figures in parentheses indicate the number of beneficiaries and the ratio of subscribers to
the population aged 18 to 59, with Basic Pension representing the number of beneficiaries only (as ofDecember 2022)

The current public interest in National Pension reforms is notably higher than usual.
Over the past few years, the National Pension has become a significant social issue, withgrowing public distrust. Extreme proposals such as the abolition of the National Pension
have even garnered some public support. This stems from concerns about fiscal
sustainability and income adequacy due to the rapidly increasing old-age dependency
ratio, severe low birth rates, and high elderly poverty rates. Indeed, candidates in the2022 presidential election across various political parties recognized the need for
National Pension Reform and proposed a range of pledges7 from parametric reforms to
structural changes, reflecting public sentiment.
The criteria for evaluating National Pension reforms can be divided into fiscal
sustainability and income adequacy. Fiscal sustainability implies maintaining afinancial state where the pension system can continue to provide stable benefits not only
to current pensioners but also to future contributors over a long period. This isparticularly crucial in partially funded pension systems8 like Korea's (Figure 2.3). For
the system to be perceived as reliable by new entrants, it must ensure intergenerational
7 Candidates from the ruling Democratic Party of Korea and opposition parties, including
the People Power Party (PPP), Justice Party, and People's Party, acknowledged the need for
National Pension reform but did not provide detailed plans (Dong-A Ilbo, February 5, 2022).
8 Korea operates a partially funded pension system where the National Pension Fund issourced from contributions, investment returns, and government subsidies.

5fairness and inclusivity, thereby fostering confidence that contributions will translate
into future benefits. Concurrently, from the perspective of income adequacy, the pension
system must ensure that those who consistently contribute receive stable benefits thatprevent old-age poverty. This dual focus is central to the reform's core objectives.
Figure 2.3. Partially Funded National Pension Scheme(Fund Status as of the End of January 2024)
Income (A)Cumulative
Amount

For the current
period in 2023

2022

2021

2020

2019

2018

1,120,815

63,16981,95791,551

69,38764,19759,762

Pension contributions

780,224

43,13655,91453,54051,21747,80044,374

Investment returns

339,858

20,023

26,03438,00018,163

16,382

15,378

733

9

8

12

6

15

10

Government subsidies and others
Expenditure (B)329,362

29,86534,821

29,87526,35923,433

21,396

Pension benefit payments

317,807

29,231

34,02029,13725,654

22,76420,753Administrative expenses

11,371

627

792

729

697

660

635

184

6

9

9

8

8

8

Fund Increase Amount (A-B)

791,453

33,304

47,136

61,67643,02740,76438,366

Accumulated Reserve Funds(Based on Purchase Price)

791,453

791,453

758,149

711,013649,336606,309565,544

Welfare village management andoperational expenses

Source: Compiled by the author from the "Fund Status" by the National Pension Fund Management
Office.
Notes: The unit is billion KRW. The figures for income, expenditure, and fund status are prepared ona cash basis. "Government Subsidies, etc." refers to government subsidies, rental deposits for public
corporation office buildings, and welfare pension transfers, while "Administrative and Operating
Expenses" include personnel costs, operating expenses, and system-related business expenses.

However, balancing fiscal sustainability and income adequacy is challenging, as theseconcepts are not inherently complementary. Finding a solution that satisfies both criteria
simultaneously is difficult, and such a compromise may not be viewed as satisfactoryfrom any perspective. Hence, rather than pursuing an impossible goal of satisfying
everyone with a reform package, it is more pragmatic to address urgent and longstanding
issues sequentially. Notably, after the 4th National Pension Financial Estimate Resultsin 2018, attempts to find a single solution to all issues did not yield significant resultsover five years.
The demographic shifts since then have underscored the urgency of pension reform,
as indicated by the 5th National Pension Financial Estimate Results. According to theseresults, the imbalance between contributions and benefits, with a rising number of6

recipients and decreasing contributors, will exacerbate fiscal imbalances9. It is projectedthat the pension fund will start experiencing deficits by 2041, with depletion expectedby 2055. The proposed 5th National Pension Reform Plan aligns with the Yoon Suk-yeol
administration's emphasis on fiscal stabilization. Nevertheless, the plan reveals a sharp
debate between fiscal stabilization and old-age income security, with the former
prevailing in the final proposal.
Historically, the National Pension underwent reforms in 1998 and 2007 to enhancefiscal stability. The 1998 reform reduced the income replacement rate for a 40-year
contribution period from 70% to 60% and raised the pensionable age to 61 by 2013, withsubsequent increases every five years, reaching 65 by 2033. The 2007 reform further
reduced the income replacement rate from 60% to 50% in 2008, with gradual reductions
to 40% by 2028, but did not increase the contribution rate (Figure 2.4).
Figure 2.4. Evolution and Reform Plan of the National Pension System
Year
Contribution
Rate (%)

Workplace-based
Insured Persons

1988

1993

3

6

Individually Insured
Persons

1999

2000

2008

2009

4

70

Pensionable Age

2005

2018

2023

2025

60

50

49.5

120

100

99

2028

2033

2038

*5th National Pension
Reform Plan

9

60
140

2013

9
3

Income Replacement Rate (%)
Monthly Pension Amount (10,000 won)

1998

47.5

45

42.5

61

62

63

95

90

85

40
64

65

*

80

Source: Compiled by the author from the homepage of National Pension Service (NPS).
Notes: Monthly Pension Amount assumes 40 years of participation with an average monthly incomeof 2 million KRW. Contribution rate: For Workplace-based Insured Persons, the rate was 9% at theenactment of the National Pension Act in 1988, 3% for the first 5 years of implementation, and 6% for
the next 5 years. For Individually Insured Persons, the rate was initially 3%, increased by 1% eachyear starting in 2000, reaching 9% by 2005. Income Replacement Rate: Based on 40 years ofparticipation. As of 2018, the actual average participation period was 23.8 years, with an effective
income replacement rate of 23.9%.

Currently, the National Pension includes Workplace-based Insured Persons,Individually Insured Persons, and Voluntarily Insured Persons. Workplace-based
Insured Persons includes employees and employers in workplaces with at least one
employee, mainly covering regular and some non-regular workers. Contributions are

9 The dependency ratio (number of recipients/number of contributors) is projected to risefrom 24% in 2023 to 95.6% in 2050 and 138.3% in 2070 (The 5th National Pension
Financial Estimate Results).

7

shared equally between employers and employees (contribution rate of 4.5%).
Individually Insured Persons includes self-employed individuals, agricultural andfishery workers, and non-regular workers aged 18-59, who bear the full cost themselves(contribution rate of 9%). Voluntarily Insured Persons includes those outside the othercategories, such as homemakers and students, who opt to join. This paper focuses on
Workplace-based Insured Persons and Individually Insured Persons.
Figure 2.5. Types of National Pension Enrollment
Enrollment Type

Eligible ParticipantsContribution Rate (9%)

Method of Contribution Payment

ExamplesWorkplace-based Insured Persons

Workplaces (companies) employing one or more
employees are required to participate in the National
Pension Scheme. Employers and employees aged 18
to 59 working at these workplaces are classified as
workplace-based enrollees.

Employer: 4.5%
Employee: 4.5%

Employee pension contributions are deductedfrom monthly salary.

Regular employees,*Non-regular employees

Individually Insured Persons

Citizens aged 18 to 59 residing in Korea who haveincome from individual businesses. This includes all
individuals with income except for those classified as
workplace-based enrollees.

9%

Individuals must report their standard
monthly income to the National Pension
Service (NPS), which will determine thecontribution amount based on this income.

Self-employed individuals,
Agricultural and fisheries
workers,
Non-regular employees

9%

Contributions are determined each year basedon the standard monthly income as ofDecember 31 of the previous year for all regionbased enrollees, using the median standard
monthly income as the reference point("Median Standard Monthly Income").

Full-time homemakers,
Students

Voluntarily Insured Persons(Voluntarily Insured/Voluntarily andContinuously Insured Persons)Individuals aged 18 to 59 who do not fall under
workplace-based or region-based categories andchoose to enroll voluntarily by applying.

Source: Compiled by the author from the homepage of National Pension Service (NPS).

Since the dual reforms of 1998 and 2007, efforts to raise contribution rates based on
the 3rd National Pension Financial Estimate Results for 2013 failed due to participant
opposition. In 2018, under the progressive Moon Jae-in administration and the
Democratic Party, the 4th National Pension Comprehensive Plan (Draft) proposed (1)increasing both the income replacement rate and contribution rate and (2) explicitly
ensuring state-guaranteed pension benefits to enhance public trust10. However, these
proposals did not lead to legislative changes. The 5th National Pension Reform Planannounced on October 30, 2023, prioritizes fiscal stabilization. It introduces fiscal targets
to ensure the pension fund does not deplete within the projection period (2023-2093) andmaintains long-term financial equilibrium, marking a significant step compared toprevious vague targets (Figure 2.6).

10 The 4th National Pension Comprehensive Plan (Draft), announced in December 2018,
focused on old-age income security, proposing to maintain the income replacement rate andincrease the contribution rate, counter to the results of the 4th National Pension Financial
Estimate Results.

8

Figure 2.6. Comparison of Fiscal Objectives in Public Pension Systems
Fiscal Objectives
South Korea(National Pension System)

Estimation Period Explicit Statement

・Adjustments are made to ensure the long-term financial balance of the National
Pension system.
・Contribution Rate: Capped at 20% until 2020 and 22% until 2030.

Germany(National Pension System)

・Income Replacement Rate: Minimum of 46% until 2020 and 43% until 2030.

Canada(CPP)・Applies the minimum contribution rate necessary to maintain a steady level ofthe funding ratio for up to 60 years from the valuation date.

Japan(National Pension System,
Employees' Pension Insurance)
United States(OASDI)
Sweden・If contribution rates exceed the cap or income levels fall short of projections, thegovernment will implement supplementary measures.

・Financial Objective: Maintain a funding ratio of 1.0 over 100 years.
・Specifies a minimum income replacement rate.
・Short-term Financial Objective: Balance income and expenditures over 10 years.
・Long-term Financial Objective: Balance income and expenditures over 75 years.
・Equilibrium Ratio: 1.0

70 years○

15 years(5-year mediumterm outlook)○

75 years○

100 years

×75 years(10-year shortterm outlook)×

75 years

×

Source: Compiled by the author from p.106 of the Korea Institute for Health and Social Affairs' "Studyon the Restructuring of Public Pensions."
Notes: The equilibrium ratio refers to the value obtained by dividing the sum of estimatedcontribution assets and the market value of reserve funds by the pension liabilities (accumulated
nominal pension benefits and pension contributions).

The proposed 5th National Pension Reform Plan outlines scenarios combining
increased contribution rates (12%, 15%, 18%), raising the pensionable age (from thecurrent 65 to 68), and improving fund investment returns (0.5-1 percentage points above
the

5th

National

PensionFinancial

Estimate

Results).

It

also

considersintergenerational equity in contribution rate increases11. For analysis, this paper focuses
on reform scenarios excluding investment return improvements, composed of increased
contribution rates, raising the pensionable age, and varying intergenerational
contribution rate increments, as shown in Figure 2.7.

11 The plan proposes increasing the contribution rate by 0.6% annually for those born in1986 or later (20s-30s) from 2025, and by 1% annually for those born up to 1985 (40s-50s)
from 2025 (5th Comprehensive National Pension Management Plan).

9Figure 2.7. Contents of the 5th National Pension Reform Plan used in This Paper
Main Contents of the 5th National Pension Reform Plan
Types of
Reforms⑴ Increase in the contribution rate
( currently 9% )⑵ Differences in the rate of increase by age group⑶ Raising the pensionable age( currently 65 )12%

Increase by 0.6% annually for
5 years starting from 2025

××

Proposal 2

15%

Increase by 0.6% annually for
10 years starting from 2025

××

Proposal 3

18%

Increase by 0.6% annually for
15 years starting from 2025

××

Proposal 1

Proposal 4

18%

Increase by 0.6% annually for
15 years starting from 2025

Proposal 5

18%

Increase by 0.6% annually for
15 years starting from 2025

Proposal 6

18%

Increase by 0.6% annually for
15 years starting from 2025

For the generation born in or after 1986 (those in their
20s and 30s as of 2025): Proposal 1
×

For the generation born up to 1985 (those in their 40s
and 50s as of 2025): Increase by 1% annually for
9 years starting from 2025
×

68

Raise the pensionable age by 1 year
every 5 years starting from 2038

68

Raise the pensionable age by 1 year
every 5 years starting from 2038

For the generation born in or after 1986 (those in their
20s and 30s as of 2025): Proposal 1
For the generation born up to 1985 (those in their 40s
and 50s as of 2025): Increase by 1% annually for
9 years starting from 2025

Source: Compiled by the author from p.48-49 of the Ministry of Health and Welfare's "The 5th
National Pension Comprehensive Plan (Draft)."10

2.2 Literature Review
Research analyzing the effects of National Pension reforms on income redistribution
includes the following studies:
Kim (2004) constructed a panel dataset from the statistics of the National Pension
Corporation and analyzed the intragenerational income redistributive effects of the
National Pension Act amendment proposal submitted to the National Assembly in 2004.
Kim's analysis showed that, for younger generations, the structure shifts towards
generating higher net transfers from low-income groups.
Kim and Kang (2005) utilized income data from 1988 to 2003 and estimated future
incomes to analyze the income redistributive effects of the National Pension. They
constructed a pseudo-panel based on cross-sectional data and found that the income
redistributive effect, measured by the Gini coefficient, improved by 6 percentage points
for Workplace-based Insured Persons of a single generation. However, there werelimitations in estimating future incomes for post-2004 participants due to the inability
to reflect individual characteristics, the application of a uniform wage growth rate, andthe assumption that participants would remain continuously employed without
experiencing unemployment.
Lee (2006) analyzed the income redistributive effects of the National Pension System,
considering differences in life expectancy across income levels and generations, using
data from the Korean Labor & Income Panel Study (KLIPS). Lee estimated past andfuture incomes of individual participants not included in the panel data throughregression analysis and attempted to reflect the expected differences in life expectancy
across income levels. However, due to the absence of domestic data on life expectancy
differences by income level, education level was used as a proxy variable, which did notadequately capture the actual differences in elderly mortality rates across educational
standards.
Kang et al. (2008) analyzed the income redistributive effects of the 2007 National
Pension Reform using data from KLIPS. Their findings indicated that the income
redistributive effect of the 2007 reform was only 0.3 percentage points, having negligible
substantial impact on income redistribution. Although improvements were made byestimating lifetime incomes of participants through regression analysis, the study faced
limitations due to the strong assumption that participants would remain continuously
employed without experiencing unemployment in the future.
Kim (2008), similar to Kang et al. (2008), analyzed the income redistributive effectsof the 2007 National Pension Reform using KLIPS data. However, Kim's study differedby estimating the number of children in households after the survey period and including11

self-employed and non-regular workers in the analysis. The study used Gini coefficients,
net transfers, and benefit ratios as indicators of income redistributive effects.
Yuh and Yang (2011) used data from the Household Income and Expenditure Surveyof Statistics Korea and future population projections to form income quintiles based on
lifetime income. They measured and compared the expected return rates by income
quintile, considering survival rates. Their analysis showed that as income quintiles
increased, the expected return rates decreased, indicating a significant improvement in
the income redistributive effects of the National Pension.
Additionally, Lee et al. (2016), Choi (2016), Choi and Han (2017), and Kim (2019)analyzed the income redistributive effects using the benefit ratio as an indicator. After
estimating lifetime earned income, they calculated the present value of total pension
contributions and total pension benefits under the current system, and then determined
the benefit ratio. They analyzed the income redistributive effects of the National Pension
by forming income quintiles based on lifetime earned income or lifetime income andmeasuring the average benefit ratio for each quintile.
All these prior studies evaluated the redistributive effects based on lifetime income.
The redistributive effects of social security and tax systems should be assessed on alifetime income basis rather than an annual income basis, as taxes and social insurance
contributions during working years largely offset each other (Haider and Solon (2006)12,
Ojima (2010)). Internationally, numerous studies have assessed the income
redistributive effects of their pension systems using panel data to estimate lifetime
income (Coronado et al. (2000, 2011), Liebman (2002), Leimer (2004), Levell et al. (2015),
Bengtsson et al. (2016), Haan et al. (2017), Xing (2021)).
However, the aforementioned studies analyzing the income redistributive effects of
National Pension reforms identified several limitations in estimating lifetime income
from panel data. Specifically, these studies did not reflect individual heterogeneity,
assuming participants would remain employed for all future periods post-survey andthat the number of children would remain unchanged. Additionally, they did not accountfor differences in participation periods by income level (Kim (2019)13) or differences in

12 Haider and Solon (2006) demonstrate that income redistribution metrics based on
annual income tend to be exaggerated. They attribute this to errors-in-variables bias.
13 An analysis considering the varying contribution periods to the National Pension System
across different income levels examines how these variations impact the effectiveness of
income redistribution.

12

life expectancy by income level (Coronado et al. (2000)14, Woo et al. (2016)15). This paper
addresses these limitations (detailed in Figure 2.8) by constructing several estimation
models that reflect individual heterogeneity.
Figure 2.8. Limitations in Previous Studies
Limitations in Reflecting the Heterogeneity of Individual Participants
A

The number of children after the survey period is assumed to remain unchanged based on the latest survey data.

B

Employment status after the survey period is assumed to remain unchanged based on the latest survey data.

C

Future income after the survey period is calculated by applying the same wage growth rate (forecasted value).

D

Differences in contribution periods across income quintiles are not reflected.

E

Differences in average life expectancy across income quintiles are not reflected.

F

Self-employed individuals and non-regular workers are excluded from the analysis.

G

The analysis is based on the average income of all participants rather than on an empirical analysis at the levelof individual participants.

<Summary of Previous Research Analyzing the Income Redistributive Effects of
National Pension Reform using Lifetime Income>Researcher’s name(Year of publication)

Kim (2004)

Data

Scope of analysis

Statistical data from the National Pension
Service (NPS)(currently the NPS Big Data Portal)

Kim and Kang (2005)
Lee (2006)
Kang et al. (2008)•

2004 National Pension Reform Proposal

A,B,D,E,F•

Initial National Pension and the 1997
National Pension Reform Proposal

A,B,C,D,E,F

Korean Labor & Income Panel Study

B,D,E
Household Income and Expenditure Survey &Population Projections•

2007 National Pension Reform Proposal

Lee et al. (2016)
Choi (2016)
Choi and Han (2017)

B,D,E,F
A,B,D,E,F

Kim (2008)
Yuh and Yang (2011)

Limitations

A,B,G
B,F
B,F

Korean Labor & Income Panel Study

B,F

Kim (2019)•2018 National Pension Reform Proposal

B,F,G

Source: Created by the author

Since the announcement of the 5th National Pension Reform Plan on October 30,
2023, no studies have analyzed the income redistributive effects of the proposed

14 Coronado et al. (2000), in their study on the U.S. public pension system (Old-Age,
Survivors, and Disability Insurance: OASDI), found that when reflecting the longer life
expectancy of high-income groups compared to low-income groups, the U.S. public pension
system was shown to redistribute income in a regressive manner.
15 Woo et al. (2016) analyzed the effects of the 1998 and 2007 National Pension reforms onretirement income security by incorporating the life expectancy differentials by gender andincome class.

13reforms16. Moreover, this paper includes self-employed and non-regular workers in theanalysis to examine policy effects by employment type, distinguishing it from previous
studies. Prior research excluded self-employed and non-regular workers due to therepresentativeness issues arising from their low national pension participation rates.
However, considering their relatively unstable employment conditions compared toregular workers, disparities in participation rates and periods, and their vulnerability
from a retirement income security perspective, it is essential to scrutinize these groups
considering the National Pension Act’s objective to enhance public welfare and stabilize
livelihoods.
This paper analyzes the income redistributive effects of the proposed National
Pension Reform from both intergenerational and intragenerational perspectives. The
rationale is that the Korean national pension formula includes an earnings-related
component ("B value"), which may carry forward income disparities from working years
into old age, necessitating an examination from the perspective of intragenerational
income redistribution (Oshio and Urakawa (2008)17).
Chapter 3 will explain the data and estimation methods. Chapter 4 will analyze theestimation results and clarify the income redistributive effects of the current National
Pension System and each reform proposal. Finally, Chapter 5 will summarize theimplications of each reform proposal from the perspective of income redistribution basedon the estimation results.

As of May 1, 2024, according to the academic information provided by the Korea Citation
Index, there are no academic papers that have studied the 5th National Pension Reform
Plan as a research theme. However, there is an academic paper by Jeong and Kim (2023)
that critically evaluates the main points of 5th National Pension Financial Estimate
Results announced in March 2023.
17 Oshio and Urakawa (2008) point out the necessity of examining not onlyintergenerational but also intragenerational income redistributive effects. For example, inthe case of Japan's Employees' Pension Insurance, they highlight that the earnings-related
component of pension benefits tends to carry forward income disparities from working years
into retirement. They also note the significant disparity in pension benefits between
recipients of the National Pension, who receive only the basic pension, and recipients of the
Employees' Pension, who receive both the basic and earnings-related components.
16

14

3

Analysis Preparation

3.1 Data and Assumptions in Statistical Analysis
This paper utilizes data from the Korean Labor & Income Panel Study (KLIPS) toestimate lifetime income, lifetime pension benefits, and lifetime pension contributions
while tracking national pension enrollment histories. The KLIPS is a longitudinal surveythat tracks economic activity, labor market mobility, income activities, consumption,
education, vocational training, and social life among household members residing in nonrural areas of Korea. The panel consists of approximately 5,000 households and issurveyed annually. In Korea, other large-scale labor market surveys include the"Economically Active Population Survey" and "Survey on the Economically Active
Population Employment Structure" by Statistics Korea, and the "Labor Force Flow
Survey" and "Basic Survey on Wage Structure" by the Ministry of Employment and Labor.
However, these are all cross-sectional surveys limited to specific points in time,
restricting their ability to capture dynamic aspects of economic activity, labor market
transitions, income, and consumption changes at the individual level. Conversely,
KLIPS's panel data, which allows for long-term tracking of changes and transitions inhouseholds and individuals, is more suitable for estimating lifetime income on an
individual basis. Additionally, the richness of KLIPS's questions for explanatory
variables in income estimation models is another reason for its selection. This study uses
data from the 1st to the 24th waves of the KLIPS.
Figure 3.1. Overview of the Korean Labor & Income Panel Study (KLIPS)
Survey start year

1998

Survey objective

The initial survey aimed to illustrate the labor market characteristics of urban households.
Households residing in urban areas of South Korea and individuals aged 15 and above.

Population

Sampling frame(However, households on Jeju Island, those fulfilling military service, and those residing in institutions
were excluded from the survey.)

The 19,025 survey districts from the "1995 Population and Housing Census" by the Korea
National Statistical Office.
Two-stage cluster systematic sampling

Sampling method(A method was used to first select 1,000 survey districts and then randomly extract five households fromeach selected district.)

5,000 households

Sampling results

Source: Created by the author from the "Survey Overview" of the KLIPS.

15

The sample selection for this study adheres to the following criteria:•

Focus on Workplace-based Insured Persons and Individually Insured Persons,excluding those with histories in special occupational pensions.

•

Include participants enrolled in the national pension from 2018 to 2020, aged 25 to
57 in 2020. The age of 25 for pension enrollment is based on Kim (2019)18, and theage of 57 corresponds to individuals who were 25 in 1988, the year the national
pension started.

•

Exclude individuals with a history of receiving National Pension benefits.

•

Exclude foreign workers due to employment instability and differing employment
patterns.

•

Exclude participants whose employment status changed during the survey period,
such as those shifting from regular employment to self-employment or non-regular
employment.
The representativeness analysis of the KLIPS data and the selected sample based on

the above criteria is summarized in Figure 3.2. Comparing the number of participants
and gender ratios by enrollment type between the KLIPS data and the 2020 National
Pension Service (NPS) data confirms that using KLIPS data poses no issues regarding
representativeness. Additionally, since the study conducts separate analyses for
Workplace-based Insured Persons and Individually Insured Persons, any differences intheir ratios do not affect the analysis.
Figure 3.2. Number of Participants and Gender Ratio by
Type of National Pension Enrollment (1997-2020)
Workplace-based
Insured Persons
Individually
Insured Persons

National Pension Service (NPS)

Korean Labor & Income Panel Study (KLIPS)

Sample used in this study (KLIPS)

Male

8,307,000 (58)8,113 (56.9)

5,792 (58.5)

Female6,012,000 (42)6,150 (43.1)

4,117 (41.5)

Male1,858,000 (48.9)

6,807 (50.7)

3,073 (51.6)

Female1,941,000 (51.1)

6,622 (49.3)

2,885 (48.4)

Source: Created by the author from the data of the National Pension Service (NPS) and the KLIPS.
Notes: The units represent the number of participants, and the figures in parentheses indicate thegender ratio percentage. The data from the National Pension Service (NPS) reflect the number ofparticipants as of 2020. The data from the KLIPS represent the cumulative totals from 1997 to 2020
(from the 1st to the 24th survey waves).

18 Kim (2019) sets the age of 25 for pension enrollment based on the average age of newmale participants, which was 26.5 in 2008 and 24.3 in 2017, due to the lack of official dataon average ages for new National Pension participants.

16

This study makes several assumptions for the statistical analysis:•

Future values for real wage growth, real interest rates, and inflation rates,
necessary for the present value calculation of lifetime pension benefits and lifetime
pension contributions, use the basic demographic and economic assumptions fromthe 5th National Pension Financial Estimate Results (Figure A1 in the Appendix).
The actual real interest rates from 1988 to 2019 are derived from subtracting theConsumer Price Index (CPI) from nominal interest rates, using deposit bankinterest rates.

•

Life expectancy for individuals is based on the 2021 Life Tables published by
Statistics Korea in December 2022, reflecting gender- and cohort-specific life
expectancy for estimating lifetime pension benefits.

•

Only labor income is included in the income range analyzed, excluding financial
income, secondary job income, and inheritance income.

•Retirement age is assumed to be 60 for regular employees, following the guidelines
of Article 19, Paragraph 1 of the Act on the Promotion of Employment for the Elderly.
For self-employed and non-regular workers, it is assumed they work until the year
before pension benefits begin, based on the "actual retirement age" reported by the
Korea Future Asset Retirement Pension Center.

•

Residential locations are assumed to remain unchanged from the last survey
response.

•

The number of children is assumed to remain constant for married women over theage of 40, based on their number of children at age 39. For individuals over 40
without data, the number of children is inferred from their status at 39. In
estimating future income, the number of children is a crucial variable. Therefore,
instead of adhering to the strong assumption from previous studies that the numberof children remains unchanged from the last survey response, this paper uses datafrom the Korean Labor & Income Panel Study (KLIPS) to estimate the number ofchildren for married women. According to Kim (2007)19, there are differences in thedeterminants of the number of children between married women over 40 and those
39 or younger. Hence, the above assumptions are made for analytical convenience.

•

Employment status is assumed to remain unchanged during the employment period.

•

The study uses income earned in the year preceding the survey year due to KLIPS
collecting previous year's income data.

•

The base year for present value calculations is 2020, the latest year with available

19 Kim (2007) analyzes the determinants of the number of children in Korean households
using a Count Data Model.

17

KLIPS data (survey year 2021).

3.2 Estimation Method
To examine the intragenerational income redistributive effect of the national pension,
the following estimations are performed. First, the determinants of the number ofchildren each participant will have in the future are estimated using Generalized Least
Squares (GLS), and these estimates are used to predict future numbers of children. Next,
a Logit model estimates the determinants of future employment, and these estimates
are used to predict future employment status. For employed participants, the Mincer
earnings function is used to elucidate the relationship between age, tenure, and wage
income, segmented by gender and employment type (regular employees, self-employed,
and non-regular employees). This allows the prediction of annual wage income from
employment to retirement for each participant. These predictions are then adjusted forwage growth rates and discount rates to determine annual wage levels. Subsequently,
annual contributions and future pension benefits are calculated.
The estimation equations for the determinants of future children are unique to thisstudy, while those for future employment follow Xing (2021). The estimated lifetime
pension benefits and contributions, based on the projected lifetime income, are calculatedusing formulas for pension benefits and contributions published by the Ministry of
Health and Welfare. They represent the theoretical values if participants' income follows
the projections. Finally, the net transfer amount, derived by subtracting lifetime
contributions from lifetime pension benefits, is calculated for each gender, employment
type, and income level, and the Mean Log Deviation (MLD) index is derived to assess theincome redistributive effect. The flow of these estimation methods is summarized in
Figure 3.3.

18

Figure 3.3. Analysis Flow

１

２

Projection of thenumber of kid“GLS Model”

Estimated
number of kid

３

Employment
probability

Estimation of lifetime income“Mincer earnings function”

5

４
Calculation of lifetime
pension benefits (A)6Projection ofindividual employment“Logit Model”

Calculation of lifetime
pension contributions (B)Analysis of Income Redistribution Effects
Analytical measure: Mean Log Deviation calculated
from net transfer amount (A-B)
Source: Created by the author.

3.2.1 Lifetime Income
In this study, we estimate individuals' lifetime income using the Mincer earnings
function to predict future earnings beyond the survey period of the Korean Labor &Income Panel Study (KLIPS). Additionally, the projected number of future children andthe likelihood of future employment are incorporated into the lifetime income
estimations.
First, we estimate the number of children for married women. The number of children
for the husbands within the same household follows the estimated number for theirwives. As mentioned in the assumptions for the statistical analysis, it is assumed thatwomen do not give birth after the age of 40. For individuals over 40 without data, thenumber of children at age 39 is used.

19

The KLIPS, as detailed by Song (2012), is a panel data set that comprehensively
captures the economic situation of households, thereby overcoming the limitations of the"National Fertility and Family Health and Welfare Survey" conducted by the Korea
Institute for Health and Social Affairs (KIHASA), which excludes variables related tothe economic status of households. By utilizing the strengths of the KLIPS, which
includes many variables relevant to the determinants of the number of children, we
employ the Generalized Least Squares (GLS) method to estimate the number of children
for married women under 39, as shown in equation (1).
The number of children for each married woman is determined by variables such asage, employment status, labor income from the previous year (wage or business income),
household income from the previous year, and attributes of each married woman (suchas education level, whether they reside in a metropolitan area, and homeownershipstatus). The rationale for using the previous year's labor and household income is thatthe economic situation immediately before childbirth serves as a key decision factor forhaving children. Moreover, since this study uses the number of children in the relevant
year to estimate future income (as referenced in equation (4) later), the predicted valuesof labor and household income from equation (4) are used to estimate the future numberof children.
By using these comprehensive variables, we construct the estimation equation for thenumber of children for married women under 39, leveraging the advantages of the KLIPS
data set for more accurate and representative estimations of lifetime income.
𝑘𝑖𝑑!",$ = 𝛼0 + 𝛼1 𝐴!",$ + 𝛼2 𝐸𝑆!",$ + 𝛼% 𝑙𝑛𝑤𝑎𝑔𝑒!",$&' + 𝛼( 𝑙𝑛ℎ𝑤𝑎𝑔𝑒!",$&' + 𝜆𝑋!",$+ 𝑒!",$ ⑴𝑘𝑖𝑑!",$ : Number of children for married women in year 𝑡, 𝐴!",$ : Age of married womenin year 𝑡、𝐸𝑆!",$ : Employment status of married women in year 𝑡,
𝑙𝑛𝑤𝑎𝑔𝑒!",$&' : Labor income (salary income or business income) of married women inyear 𝑡 − 1 , 𝑙𝑛ℎ𝑤𝑎𝑔𝑒!",$&' : Household income in year 𝑡 − 1 (total labor income ofhousehold members excluding married women), 𝑋!",$ : Attributes of married women(education level, residence in a metropolitan area, homeownership), 𝑒!",$ : Error term
Based on the parameters estimated from equation (1), we derive the estimation
I !",$ ) to estimate the future number of
equation (2) for the future number of children (𝑘𝚤𝑑children for married women under the age of 39.

20

I !",$ = 𝛼J0 + 𝛼J1 𝐴!",$ + 𝛼J2 𝐸𝑆!",$ + 𝛼J% 𝑙𝑛𝑤𝑎𝑔𝑒!",$&' + 𝛼J( 𝑙𝑛ℎ𝑤𝑎𝑔𝑒!",$&' + 𝜆K𝑋!",$𝑘𝚤𝑑⑵

I !",$ : The predicted number of children for married women in year 𝑡𝑘𝚤𝑑
Next, since this study focuses on workers who bear pension contributions, it isnecessary to predict whether individuals will continue to be employed beyond the survey
period. Specifically, we employ a Logit Model to estimate each participant's probabilityof employment using equation (3). The likelihood of an individual being employed isdetermined by variables such as age and its square, the number of children and its
square, household income representing the total labor income of other household
members, the population of the city or province where they reside, and various personal
attributes (education level, whether they live in a metropolitan area, homeownershipstatus, health status, and marital status).
By incorporating these variables, we construct a detailed model to accurately predict
the employment probabilities of the individuals in our study, thereby enabling a more
precise estimation of their future labor income and corresponding pension contributions.
Pr(𝑃𝐸) = 1)

= 𝐹R𝛽0 + 𝛽1 𝐴) + 𝛽2 𝐴2) + 𝛽% 𝑘𝑖𝑑) + 𝛽( 𝑘𝑖𝑑)2 + 𝛽* 𝑙𝑛ℎ𝑤𝑎𝑔𝑒),$ + 𝛽+ 𝑃𝐶𝑃) + 𝜆𝑋) + 𝑢),$ V
𝑒𝑥𝑝R𝛽0 + 𝛽1 𝐴) + 𝛽2 𝐴2) + 𝛽% 𝑘𝑖𝑑) + 𝛽( 𝑘𝑖𝑑)2 + 𝛽* 𝑙𝑛ℎ𝑤𝑎𝑔𝑒),$ + 𝛽+ 𝑃𝐶𝑃) + 𝜆𝑋) + 𝑢),$ V=

Y1 + 𝑒𝑥𝑝R𝛽0 + 𝛽1 𝐴) + 𝛽2 𝐴2) + 𝛽% 𝑘𝑖𝑑) + 𝛽( 𝑘𝑖𝑑)2 + 𝛽* 𝑙𝑛ℎ𝑤𝑎𝑔𝑒),$ + 𝛽+ 𝑃𝐶𝑃) + 𝜆𝑋) + 𝑢),$ VZ⑶

Pr(𝑃𝐸) ): The employment probability of participant 𝑖, 𝐴) : The age of participant 𝑖, 𝐴2) :The square of the age of participant 𝑖, 𝑘𝑖𝑑) : The number of children of participant 𝑖,𝑘𝑖𝑑)2 : The square of the number of children of participant 𝑖, 𝑙𝑛ℎ𝑤𝑎𝑔𝑒),$ : The householdincome of participant 𝑖 in year 𝑡 (Sum of labor income of household members), 𝑃𝐶𝑃) :The population of the city/province where participant 𝑖 resides, 𝑋) : The attributes ofparticipant 𝑖 (education level, residence in a metropolitan area, homeownership, healthstatus, marital status), 𝑢),$ : Error term
Based on the employment probability (Pr(𝑃𝐸) )) of participant (𝑖 ) estimated fromequation (3), the future employment status (𝐸𝑆) ) of participant (𝑖) is determined asfollows.

𝐸𝑆) = [

1 𝑖𝑓 Pr(𝑃𝐸) = 1) ≥ 0.5
0 𝑖𝑓 Pr(𝑃𝐸) = 1) < 0.5

21Finally, using the values of the future number of children and employment statusobtained from equations (2) and (3), we estimate the future income. In this study, we
utilize the Mincer earnings function, which effectively leverages the rich set of variables
capturing worker attributes in the Korean Labor & Income Panel Study (KLIPS), toestimate the income of each participant beyond the survey period using equation (4).
Specifically, the income of each participant is structured as follows:1.

For regular employees, income is determined by variables such as age and its square,tenure and its square, number of children, personal attributes (education level,
metropolitan area residence, health status, marital status, firm size, occupation),and unobservable individual-specific residuals.

2.

For self-employed individuals and non-regular employees, the income estimation
excludes the firm size and occupation variables from equation (4), focusing insteadon tenure and its square and other personal attributes.
By applying these detailed models, we can accurately predict the future labor income

for different categories of workers, reflecting their distinct employment characteristics
and personal attributes.
2𝑙𝑛𝑤),$ = 𝜃0 + 𝜃1 𝐴),$ + 𝜃2 𝐴2),$ + 𝜃3 𝐶𝐸),$ + 𝜃4 𝐶𝐸),$+ 𝜃* 𝑘𝑖𝑑),$ + 𝜆𝑋),$ + 𝑣) +𝜀),$⑷𝑙𝑛𝑤),$ : The natural logarithm of participant 𝑖′𝑠 annual income in year 𝑡 , 𝐶𝐸),$ :2
Participant 𝑖′𝑠 years of tenure in year 𝑡 (Continuous years of Employment: CE), 𝐶𝐸),$：The square of participant 𝑖′𝑠 years of tenure in year 𝑡, 𝑋),$ : The attributes of participant
𝑖 (education level, metropolitan area residence, health status, marital status, firm size,
occupation), 𝑣) ： Unobservable individual effects (unobservable individual-specificresidual), 𝜀),$ : Error term
The calculation of lifetime income is structured according to equation (5), using theyear 2020 as the base year. This comprises both the self-reported labor income (either
wage income or business income) during the survey period and the projected income
estimates derived from equation (4). For household members who are excluded from thesample in specific years within the survey period, we use projected annual income values,
similar to the method for estimating future income.
The first term of equation (5) represents the annual income converted to the 2020
value from the time of initial National Pension enrollment up to the present (2020). The
second term represents the annual income from the present until just before retirement,22

adjusted to the 2020 value, taking into account the future employment probabilities
derived from equation (3). The present value of each participant's annual income isdetermined by the real interest rate (𝑟) and the real wage growth rate (𝜋). Additionally,
to ensure consistency between sample estimates and actual values, we incorporate an
adjustment factor (a) into equation (5). This factor is the average ratio over a ten-year
period (2011 to 2020) between the median income estimated from the KLIPS sample andthe actual nominal monthly average wages by gender and employment type from the
Ministry of Employment and Labor's "Survey on Labor Conditions by Employment
Type."

-

-

0&'

0&'

𝑊) = jk 𝑤),$ ∙ lR1 + 𝑟, V + k 𝑤m),$ ∙ 𝐸𝑆) ∙ l
$./

,.$

$.-1'

,.-1'

R1 + 𝜋, V
R1 + 𝑟, Vo ∙ 𝛼-⑸

𝑤),$ : The reported annual income of participant 𝑖 in year 𝑡, 𝑤m ),$ : The predicted annual
income of participant 𝑖 in year 𝑡, 𝑘: Initial year of National Pension enrollment, ℎ:2020 (Reference year), 𝑅: Retirement year, 𝑟, : The real interest rate (discount rate) inyear 𝑗, 𝜋, : The real wage growth rate in year 𝑗, 𝐸𝑆) : Employment status of participant
𝑖 (employed = 1, not employed = 0), 𝛼- : Adjustment coefficient, 𝑊) : The lifetime incomeof participant 𝑖 (evaluated as of 2020)

3.2.2 Lifetime Pension Benefits
The benefit structure of the National Pension follows a defined benefit scheme, similar
to traditional public pension systems. Each participant's pension benefit amount isdetermined according to equation (6), which includes factors such as the fixed portion (Avalue), the income-proportional portion (B value), actuarial proportional constants, andthe contribution period.
To understand the National Pension, one must first grasp the concept of the standard
monthly income. The standard monthly income refers to the declared monthly income ofa participant, truncated to the nearest thousand KRW, with set upper and lower limits.
These limits are adjusted annually based on the average income of all Workplace-based
Insured Persons and Individually Insured Persons (excluding exempted contributors)
over the preceding three years. The Minister of Health and Welfare announces theselimits by the end of March each year, which are then applied from July for a year. The
actual and assumed future values of the standard monthly income used in this paper are23

detailed in Figure A2 in the Appendix.
Next, the A value (fixed portion) in equation (6) is the average standard monthly
income of all participants over the three years preceding the pension receipt. For
example, the A value applied from April 2020 is the average of the standard monthly
incomes of all participants from 2017 to 2019, adjusted to 2020 present value byreflecting the national consumer price index as reported by Statistics Korea. Therefore,
the A value incorporates inflation and wage growth rates. The projected A values beyond
the survey period reflect the same assumptions about real interest and real wage growth
rates used in estimating lifetime income.
The B value (income-proportional portion) represents the average of eachparticipant’s annual average standard monthly income during their contribution period,
re-evaluated to present value. Hence, the B value is proportional to the participant's pastlabor income. This structure ensures that the National Pension integrates an income
redistribution function within the system, as it considers both the average income of allparticipants (A value) and the individual participant's average income during theircontribution period (B value).
Following the 1998 National Pension Reform, the weightings of the A and B values
were adjusted, shifting from a 4:3 ratio to a 1:1 ratio, thereby reducing the redistributivefunction of pension benefits. The actuarial proportional constant, which reflects theincome replacement rate specified by the National Pension Act, was also adjusted.
Initially, the pension system aimed to guarantee 70% of the average lifetime income fora 40-year average income contributor. However, reforms in 1998 and 2007 reduced theincome replacement rate to 60% and then to 50%, respectively. Since 2009, this rate has
been incrementally reduced by 0.5% annually, aiming for a 40% replacement rate by2028.
The contribution period also affects the pension benefit level. As shown in equation(6), a contribution period of 20 years allows for full pension benefits. For periods between
10 and 20 years, the pension benefit amount is incrementally increased by 5% peradditional year beyond the 10-year minimum. Contributions beyond 20 years result inhigher pension benefits.
Using equation (6), we calculate each participant's annual pension benefit amount at
the start of pension receipt. We then apply equation (7) to estimate the present value ofeach participant's lifetime pension benefits, considering their remaining life expectancy
based on the 2021 life tables by gender and cohort published by Statistics Korea in
December 2022.
For this analysis, only the participant's old-age pension is considered, excluding24

survivor pensions, aligning with the scope of the National Pension Research Institute.

𝑃),233 =[2.4 ∙ 𝑝' (𝐴 + 0.75𝐵) + 1.8 ∙ 𝑝4 (𝐴 + 𝐵) + 1.5 ∙ 𝑝% (𝐴 + 𝐵) + 𝛼 ∙ 𝑝( (𝐴 + 𝐵)]𝑃∙ y1 +

0.05𝑛
z
12

⑹

𝑃),233 : The monthly pension benefits for participant 𝑖 at the commencement of pension
receipt (Pension Benefits Begin: PBB), 𝑃: Total contribution period (months),
𝐴 : Average of the standard monthly income of all participants for the three years
preceding pension receipt (flat-rate component), 𝐵: Average of the standard monthly
income during participant 𝑖′𝑠 contribution period (earnings-related component),
𝑝' : Contribution period from 1988 to December 31, 1998 (months), 𝑝4 : Contribution
period from 1999 to 2007 (months), 𝑝% : Contribution period in 2008 (months), 𝑝( :Contribution period from 2009 onwards (months), 𝛼: Actuarial proportional constant(Earnings replacement rate coefficient), 𝑛: Years exceeding 20 years of contributions
5𝑃) = k 𝑃),233 ∙$.0∏$,.0(1 + 𝑝, )∏$,.-1'(1 + 𝑟, )⑺𝑃) : The lifetime monthly pension benefits of participant 𝑖, 𝑝, : Inflation rate in year 𝑗,
𝐷: Year of death

3.2.3 Lifetime Pension Contributions
The calculation formula for each participant's lifetime pension contributions involves
multiplying the standard monthly income of each year by the contribution rates and thendiscounting this amount to present value as of the base year, 2020. For convenience indiscounting to the base year, the formula is divided into two parts: one for the period
from the first year of pension enrollment (𝑘) to 2020 (ℎ), and another for the period from2021 (ℎ + 1) to the year before retirement (𝑅 − 1).
As illustrated in Figure 2.5, "Types of National Pension Enrollment," regular
employees enrolled through workplaces share the contribution costs equally with theiremployers, while self-employed individuals and irregular workers who are regional
enrollees bear the full cost themselves. Therefore, there are separate formulas: equation(8) for regular employees and equation (9) for self-employed and irregular workers.

25

•

For Workplace-based Insured Persons (事業場加⼊者):
-

-

0&'

$

𝐶) = jk 𝑐$ ∙ 𝑆𝑀𝐼),$ ∙ lR1 + 𝑟, V + k 𝑐$ ∙ 𝑆𝑀𝐼),$ ∙ 𝐸𝑆) ∙ l
$./

•

,.$

$.-1'

R1 + 𝜋, V,.-1'

R1 + 𝑟, V

o∙

1
2

⑻

For Individually Insured Persons (地域加⼊者):
-

-

0&'

$

R1 + 𝜋, V𝐶) = k 𝑐$ ∙ 𝑆𝑀𝐼),$ ∙ lR1 + 𝑟, V + k 𝑐$ ∙ 𝑆𝑀𝐼),$ ∙ 𝐸𝑆) ∙ l
$./

,.$

$.-1'

,.-1'

R1 + 𝑟, V⑼

𝐶) : The lifetime monthly contribution for participant 𝑖 , 𝑐$ : The national pension
contribution rate in year 𝑡, 𝐸𝑆) : The employment status of participant 𝑖 (employed = 1,
not employed = 0), 𝑆𝑀𝐼),$ : The standard monthly income of participant 𝑖 in year 𝑡

3.2.4 Income Redistribution Index
In this study, to assess the income redistributive effect of the proposed 5th National
Pension Reform Plan, we use the Mean Log Deviation (MLD).
Firstly, the Mean Log Deviation (MLD) can be defined as a measure that reflects thecharacteristic of household income generally following a log-normal distribution. It is
calculated as the mean of the deviations of the natural logarithms of incomes. The MLD
reaches its minimum value of 0 when income distribution is perfectly equal. Thismeasure is linear, making it suitable for decomposing income inequality into
contributing factors, and it is particularly sensitive to changes in the lower tail of theincome distribution compared to other inequality indices.
To examine the income redistributive effect, we decompose the MLD as shown inequation (10) to identify the contributions of intergenerational income disparity changes(intergenerational income redistributive effect) and intragenerational income disparity
changes(intragenerational

incomeredistributive

effect).

Further,withintheintragenerational income redistributive effect, we decompose the MLD by income classes
within each generation group to pinpoint the effects more precisely. Specifically, as
illustrated in equation (11), the intragenerational income redistributive effect consists ofthe contributions from changes in income disparity between income classes (inter-classincome redistributive effect) and changes in income disparity within income classes(intra-class income redistributive effect).

26

Finally, the comprehensive income redistributive effect, combining the elements fromequations (10) and (11), is represented in equation (12).
This analytical approach allows us to clearly differentiate and quantify the impacts
of income redistribution both across and within generations, providing a detailed
understanding of the proposed reform's effectiveness in addressing income inequality.

6!

7

1
𝑦„
𝑀𝐿𝐷 = k k 𝑙𝑛 ‚ …
𝑁𝑦),).' ,.'

7

7

6!

).'

).'

,.'

𝑁)
𝑦„
𝑁) 1
𝑦)
= k 𝑙𝑛 y z + k j k 𝑙𝑛 ‚ …o
𝑁
𝑦)
𝑁 𝑁)
𝑦),
7

𝑁)
𝑦„
= k 𝑙𝑛 y z
𝑁
𝑦)

7

+

k

).'

).'

𝑁)
𝑀𝐿𝐷)
𝑁

(10)

6!"

:

1
𝑦†8
𝑀𝐿𝐷) = k k 𝑙𝑛 y
z
𝑁)
𝑦)/9
/.' 9.'

:

:

6!"

/.'

/.'

,.'

:

:

𝑁)/
𝑦†8
𝑁)/ 1
𝑦)/
=k
𝑙𝑛 y z + kjzok 𝑙𝑛 y𝑁)𝑦)/𝑁) 𝑁)/
𝑦)/9
𝑁)/
𝑦†8
𝑁)/
=k
𝑙𝑛 y z + k
𝑀𝐿𝐷)/
𝑁)
𝑦)/
𝑁)
/.'

7

(11)

/.'

7

:

:

𝑁)
𝑦„
𝑁)
𝑁)/
𝑦†8
𝑁)/
𝑀𝐿𝐷 = k 𝑙𝑛 y z + k ‡k𝑙𝑛 y z + k
𝑀𝐿𝐷)/ ˆ
𝑁
𝑦)
𝑁
𝑁)
𝑦)/
𝑁)
).'

).'

/.'

(12)

/.'

𝑛: The number of income quintile groups (𝑛 = 5; first quintile group, second quintile
group, third quintile group, fourth quintile group, fifth quintile group),𝑁)/ : The number of participants belonging to income quintile group 𝑘 (𝑘 =1(first quintile
group), 2(second quintile group), 3(third quintile group), 4(fourth quintile group), 5(fifth
quintile group)) in generation group 𝑖 (𝑖 =1(Born in the 1960s), 2(Born in the 1970s),3(Born in the 1980s), 4(Born in the 1990s)), 𝑁) : The total number of participants ingeneration group 𝑖 (𝑖 = 1,2,3,4) , 𝑦)/9 : The net transfer amount for participant 𝑙belonging to income quintile group 𝑘 (𝑘 = 1,2,3,4,5) in generation group 𝑖 (𝑖 = 1,2,3,4),27𝑦)/ : The average net transfer amount for income quintile group 𝑘 (𝑘 = 1,2,3,4,5) ingeneration group 𝑖 (𝑖 = 1,2,3,4), 𝑦†8 : The average net transfer amount for the entire
sample of generation group 𝑖 (𝑖 = 1,2,3,4)

3.2.4 Income Redistribution Index
In this study, to measure the income redistributive effects of the current National
Pension System and various reform proposals, we calculate the Mean Log Deviation(MLD) based on each participant's net transfer amount. The net transfer amount usedin this study is defined, as shown in equation (13), as the difference between eachparticipant's lifetime pension benefits calculated from equation (7) and their lifetime
contributions calculated from equations (8) and (9).
Net Transfer Amount = Lifetime Pension Benefits (𝑃) ) − Lifetime Contributions (𝐶) )
(13)

28

4

Analysis Results

4.1 Case assuming all National Pension participants contribute for 20 years
This paper compares the Mean Log Deviation (MLD) for income redistribution under
the current National Pension System with the MLD under six proposed reforms
outlined in Figure 2.7, "Contents of the 5th National Pension Reform Plan used in This
Paper" to measure the effects of income redistribution.
Figure 4.1 breaks down the income redistributive effects of each reform into
intergenerational and intragenerational effects, showing the respective values. For
intragenerational effects, as introduced in equation (11), the analysis is further divided
into effects between income strata and within income strata. The "Difference from theCurrent System" column in Figure 4.1 indicates how much each reform improves(positive values) or worsens (negative values) income redistribution compared to thecurrent system.
Upon examining the results, assuming that all participants have contributed to the
National Pension for 20 years, the 5th National Pension Reform Plan generally
improves income redistribution across all employment types compared to the current
system. Specifically, reforms that include raising the pensionable age (Reform Plans 5
and 6) show significant improvements in income redistribution, largely due to betterintergenerational income redistributive effects.
When analyzing by generation, all reforms improve intragenerational income
redistribution for younger cohorts (those born in the 1980s and 1990s), while worsening
it for middle-aged cohorts (those born in the 1960s and 1970s).
Further, when analyzing by gender (Figure A9 in the Appendix), for male regular
employees who are Workplace-based Insured Persons, the reforms that raise thepensionable age (Reform Plans 5 and 6) result in worse income redistribution comparedto the current system. Similarly, for male self-employed and non-regular employees
who are Individually Insured Persons, Reform Plan 6, which includes raising thepensionable age, also results in worse income redistribution.
Conversely, for female regular employees who are Workplace-based Insured Persons
and female self-employed and non-regular employees who are Individually Insured
Persons, all reform plans show an improvement in income redistributive effects.

29

Figure 4.1 Income Redistributive Effects of the 5th National Pension Reform Plan
Based on Mean Log Deviation (MLD)(Case assuming all National Pension participants contribute for 20 years)
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect

0.00160019
0.09428879
0.00440052
0.00390502
0.00049550-0.00164085-0.00245919-0.00071986
0.00146856
0.00384684
0.04475081
0.04061230
0.00413852-0.03230555-0.02217965-0.00344092
0.01959034
0.04247429
0.03707093
0.03290713
0.00416380-0.04359013-0.01863288
0.00051591
0.01946176
0.04640914
0.00806653
0.00641583
0.00165070-0.01280589-0.00567492-0.00071140
0.00483566
0.01600726
0.09588899
0.00814005
0.17431980
0.04735964
0.04003910
0.00732053-0.03742322-0.01434611
0.00208520
0.01473004
0.04227462
0.09583730
0.08162196
0.01421534-0.07158814-0.02767670
0.00475267
0.02942181
0.07930571
0.03112286
0.02423277
0.00689009-0.01962108-0.00698580-0.00071129
0.01010798
0.02410028
0.18245985

0.00293970
0.00651700
0.00014886
0.00006833
0.00008052-0.00027645-0.00029426
0.00019171
0.00031762
0.00014190
0.00209380
0.00083587
0.00125794-0.00509015-0.00258727
0.00196330
0.00354400
0.00342805
0.00311778
0.00074245
0.00237533-0.00714487-0.00125195
0.00196088
0.00387013
0.00494115
0.00115655
0.00014570
0.00101085-0.00170672-0.00055760-0.00014252
0.00073852
0.00267917
0.00945669
0.00285813
0.00503482
0.00117451
0.00058389
0.00059062-0.00399499-0.00208292-0.00011334
0.00164098
0.00514089
0.00283731
0.00116223
0.00167509-0.00853962-0.00292805
0.00068919
0.00352759
0.00892597
0.00102299
0.00027522
0.00074778-0.00179317-0.00051894-0.00064670
0.00112770
0.00257889
0.00789295

Proposal 1
0.00052390
0.00025057▲ 0.00000196▲ 0.00000116▲ 0.00000080
0.00000219
0.00000505▲ 0.00000074▲ 0.00000366▲ 0.00000364▲ 0.00004735▲ 0.00011781
0.00007046
0.00034198
0.00037645
0.00006978▲ 0.00028300▲ 0.00043475
0.00021428▲ 0.00007187
0.00028616
0.00034951
0.00034585
0.00013408▲ 0.00013802▲ 0.00040527
0.00008559
0.00001858
0.00006701▲ 0.00013074▲ 0.00004433
0.00000832
0.00007440
0.00015936
0.00077447
0.00050872
0.00037804▲ 0.00009967▲ 0.00001340▲ 0.00008627▲ 0.00010150
0.00006051
0.00014538▲ 0.00003500▲ 0.00015567
0.00029492
0.00022112
0.00007380▲ 0.00079182▲ 0.00045187▲ 0.00016394
0.00037428
0.00110715
0.00018279
0.00013199
0.00005080▲ 0.00050483▲ 0.00027450▲ 0.00020707
0.00019084
0.00084635
0.00088676

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00079429
0.00084680
0.00077277
0.00035747
0.00037800
0.00020480▲ 0.00000196▲ 0.00000196▲ 0.00000331▲ 0.00000116▲ 0.00000116▲ 0.00000194▲ 0.00000080▲ 0.00000080▲ 0.00000137
0.00000219
0.00000219
0.00000365
0.00000505
0.00000505
0.00000841▲ 0.00000074▲ 0.00000074▲ 0.00000124▲ 0.00000366▲ 0.00000366▲ 0.00000612▲ 0.00000364▲ 0.00000364▲ 0.00000607▲ 0.00006838▲ 0.00007009▲ 0.00015413▲ 0.00016451▲ 0.00016915▲ 0.00027953
0.00009613
0.00009906
0.00012541
0.00048077
0.00049583
0.00078070
0.00049335
0.00050128
0.00080708
0.00006782
0.00006721
0.00010665▲ 0.00038049▲ 0.00038828▲ 0.00063258▲ 0.00056533▲ 0.00057698▲ 0.00093643
0.00027276
0.00027660
0.00018879▲ 0.00013974▲ 0.00015733▲ 0.00027708
0.00041250
0.00043393
0.00046587
0.00065571
0.00073213
0.00124057
0.00058811
0.00064120
0.00091046
0.00017549
0.00018012
0.00012184▲ 0.00029061▲ 0.00033100▲ 0.00061101▲ 0.00071620▲ 0.00078852▲ 0.00119597
0.00015504
0.00017345
0.00017345
0.00002088
0.00001849
0.00001849
0.00013416
0.00015496
0.00015496▲ 0.00014681▲ 0.00012428▲ 0.00012428▲ 0.00002389▲ 0.00000065▲ 0.00000065
0.00002293
0.00002261
0.00002261
0.00009500
0.00008327
0.00008327
0.00018693
0.00017403
0.00017403
0.00115175
0.00122480
0.00097757
0.00076861
0.00081140
0.00073035
0.00047442
0.00048145
0.00011330▲ 0.00014615▲ 0.00014958▲ 0.00027956▲ 0.00003019▲ 0.00003162▲ 0.00004980▲ 0.00011596▲ 0.00011796▲ 0.00022977▲ 0.00009159▲ 0.00008670▲ 0.00016931
0.00010216
0.00010218
0.00015898
0.00020676
0.00021104
0.00033298▲ 0.00007398▲ 0.00007768▲ 0.00012312▲ 0.00025931▲ 0.00026680▲ 0.00042929
0.00034709
0.00034236
0.00010419
0.00028320
0.00028462
0.00034380
0.00006389
0.00005774▲ 0.00023961▲ 0.00106084▲ 0.00107571▲ 0.00136505▲ 0.00053203▲ 0.00050627▲ 0.00072009▲ 0.00020154▲ 0.00021932▲ 0.00036248
0.00043726
0.00042738
0.00049531
0.00142104
0.00143166
0.00171270
0.00027348
0.00028868
0.00028868
0.00018124
0.00018676
0.00018676
0.00009225
0.00010191
0.00010191▲ 0.00075838▲ 0.00079259▲ 0.00079259▲ 0.00040662▲ 0.00041587▲ 0.00041587▲ 0.00033481▲ 0.00037722▲ 0.00037722
0.00028354
0.00030274
0.00030274
0.00130852
0.00138485
0.00138485
0.00124303
0.00129285
0.00084365

Proposal 5
0.00251903
0.00041966▲ 0.00000196▲ 0.00000116▲ 0.00000080
0.00000219
0.00000505▲ 0.00000074▲ 0.00000366▲ 0.00000364▲ 0.00025429▲ 0.00022194▲ 0.00003234
0.00045581
0.00078180
0.00055596▲ 0.00039107▲ 0.00143485
0.00044343▲ 0.00007988
0.00052332
0.00033646
0.00061259
0.00036372▲ 0.00018085▲ 0.00060861
0.00023247
0.00004455
0.00018792▲ 0.00032372▲ 0.00010054
0.00001372
0.00017667
0.00042180
0.00293868
0.00222171
0.00074316▲ 0.00021694▲ 0.00001594▲ 0.00020100▲ 0.00095543
0.00034037
0.00095672▲ 0.00034111▲ 0.00020155
0.00060300
0.00060025
0.00000276▲ 0.00257115▲ 0.00147205▲ 0.00152145
0.00151321
0.00405420
0.00035709
0.00021559
0.00014150▲ 0.00153547▲ 0.00078541▲ 0.00070688
0.00045977
0.00270948
0.00296487

Proposal 6
0.00242297
0.00013364▲ 0.00000331▲ 0.00000194▲ 0.00000137
0.00000365
0.00000841▲ 0.00000124▲ 0.00000612▲ 0.00000607▲ 0.00041056▲ 0.00034976▲ 0.00006080
0.00075301
0.00110383
0.00058902▲ 0.00066833▲ 0.00183834
0.00031504▲ 0.00021731
0.00053236
0.00092723
0.00093935
0.00029348▲ 0.00052239▲ 0.00110532
0.00023247
0.00004455
0.00018792▲ 0.00032372▲ 0.00010054
0.00001372
0.00017667
0.00042180
0.00255661
0.00217578
0.00013107▲ 0.00040542▲ 0.00005201▲ 0.00035341▲ 0.00102259
0.00043558
0.00110238▲ 0.00045010▲ 0.00041867
0.00017940
0.00063810▲ 0.00045871▲ 0.00290885▲ 0.00167653▲ 0.00177721
0.00161644
0.00428744
0.00035709
0.00021559
0.00014150▲ 0.00153547▲ 0.00078541▲ 0.00070688
0.00045977
0.00270948
0.00230685

Source: Author’s calculations from the KLIPS data.
Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. Selfemployed individuals and non-regular workers classified under regional members, particularly thoseborn in the 1960s, are excluded from the analysis due to insufficient sample size. The Mean Log
Deviation (MLD) in the absence of a pension system is calculated based on each member's lifetime
labor income.

30

4.2 Case reflecting differences in contribution periods and life expectancy acrossincome classThis paper incorporates individual heterogeneity among National Pension participantsby estimating future child numbers and employment status for each participant.
Additionally, we account for disparities in contribution periods and life expectancy
across income quintiles.
First, using data from the final report "In-Depth Analysis of Multi-Layered Old Age
Income Security System Using Administrative Data20" submitted by the Seoul National
University Industry-Academic Cooperation Foundation to the Ministry of Health andWelfare in November 2021, we reflect different contribution periods across income
quintiles. Specifically, we assume contribution periods of 10 years for the first quintile,
12 years for the second quintile, 14 years for the third quintile, 16 years for the fourth
quintile, and 20 years for the fifth quintile.
Figure 4.2 Average Contribution Period (months) for Cases with
National Pension Participation History
Overall

Gender

Income Quintile Group

Male

Female

1st

2nd

3rd

4th

5th

Ages 15-24

13.51

11.34

15.67

6.48

10.55

15.53

16.34

13.87

Ages 25-29

33.95

28.64

40.03

17.79

24.24

33.84

38.91

37.97

Ages 30-34

67.66

63.42

73.47

37.05

49.47

65.91

73.87

78.4

Ages 35-39 105.16

106.53103.05

56.6

78.03

103.7

117.72125.23

Ages 40-44 134.63

144.38120.74

74.8

99.87

130.63151.48167.55

Ages 45-49 158.07

181.61

127.4391.33

121.88151.15175.36201.48Ages 50-54

170.9

212.21

123.11

107.36134.02158.21

182.82220.87

Ages 55-59 175.68

228.41116

122.86143.53162.61

186.6

233.56

Source: Compiled by the author based on Table III-18, "Average Contribution Period (months) for
Cases with National Pension Participation History," p.48 from Koo et al. (2021) "In-Depth Analysis of
the Multi-Layered Retirement Income Security System Using Administrative Data"

20 The data on "Average Contribution Period (months) for Cases with National Pension
Participation History" used in this paper is compiled based on materials related to the
National Pension from the National Pension Corporation (NPS) under the Ministry of
Health and Welfare, income and taxation information, as well as labor and child-rearing
incentive tax system-related materials from the National Tax Service, and demographic
information (gender, age, region), along with household information, from the Social
Security Committee under the Ministry of Public Administration and Security, as provided
by Koo et al. (2021).

31

Simultaneously, we utilize the 2017 life expectancy data by income quintile
presented by Khang et al. (2019), based on the National Health Insurance Service
database from 2004 to 2017. For convenience, we use rounded values from Khang et al.
(2019) for calculating annual pension benefits and contributions.
Figure 4.3 Disparities in Life Expectancy by Income Class (2017)
Average life expectancy
by income quintile(Khang et al., 2019)

Assumed values inthis paper

1st quintile group

75.31

75

2nd quintile group

79.81

80

3rd quintile group

80.81

81

4th quintile group

81.81

82

5th quintile group

83.22

83

1st quintile group

83.38

83

2nd quintile group

86.12

86

3rd quintile group

86.22

86

4th quintile group

86.71

87

5th quintile group

87.72

88

Gender Income Quintile Group

Male

FemaleSource: Compiled by the author based on Figure 3, "Trends in life expectancy by income in (A) womenand (B) men in Korea and projections to 2030," from Khang et al. (2019) "Trends in Inequality in Life
Expectancy at Birth between 2004 and 2017 and Projections for 2030 in Korea."

Incorporating these disparities in contribution periods and life expectancy byincome quintile, we summarize the results of our analysis using Mean Log Deviation(MLD) in Figure 4.4, similar to Figure 4.1. The results indicate that the income
redistributive effects of the 5th National Pension Reform Plan differ from the results
before reflecting income quintile disparities. Specifically, while the proposals forincreasing the contribution rate (Reform Plans 1, 2, and 3) and modifying thecontribution rate increase pace (Reform Plan 4) continue to improve income
redistribution, the proposals for raising the pensionable age (Reform Plans 5 and 6)
show a deterioration in income redistribution, unlike the results before accounting forincome quintile disparities. This outcome is attributed to the worsening
intragenerational income redistribution outweighing the improvements inintergenerational income redistribution, leading to a deterioration in intragenerational
income redistribution across all generations. Furthermore, compared to the analysis

32results before reflecting income quintile disparities, overall income inequality, as
measured by MLD, has increased under the current system and all reform plans.
When analyzed by generation, all reform plans worsen intragenerational income
redistribution for the middle-aged cohorts (born in the 1960s and 1970s). Meanwhile,
the proposals to raise the pensionable age (Reform Plans 5 and 6) also deteriorate
intragenerational income redistribution for the younger cohorts (born in the 1980s and1990s), differing from the results before accounting for income quintile disparities.
Thus, the proposals to raise the pensionable age (Reform Plans 5 and 6) exacerbate
intragenerational income redistribution for all generations.
Next, when analyzed by gender (Figure A9 in the Appendix), for male regular
employees who are Workplace-based Insured Persons, the proposals to raise thepensionable age (Reform Plans 5 and 6), along with the proposal to increase thecontribution rate (Reform Plan 1 only) and the proposal to modify the contribution rateincrease pace (Reform Plan 4), worsen income redistribution compared to the current
system. This deterioration in income redistribution, due to the proposal to increase thecontribution rate (Reform Plan 1 only) and the proposal to modify the contribution rateincrease pace (Reform Plan 4), is attributed to the worsening intragenerational income
redistribution for the middle-aged cohorts (born in the 1960s and 1970s). For male selfemployed and non-regular employees who are Individually Insured Persons, theproposals to raise the pensionable age (Reform Plans 5 and 6) worsen income
redistribution, consistent with the overall analysis of Individually Insured Persons.
Conversely, for female regular employees who are Workplace-based Insured Persons
and female self-employed and non-regular employees who are Individually Insured
Persons, all reform plans improve income redistribution, with the proposals to raise thepensionable age (Reform Plans 5 and 6) showing the most significant improvement.
From these analysis results, it is evident that when considering disparities inpension contribution periods and life expectancy by income quintile, the proposals toraise the pensionable age (Reform Plans 5 and 6) have the potential to worsen income
redistribution for both Workplace-based Insured Persons and Individually Insured
Persons. Under the current system, where over 95% of the income inequality, as
indicated by MLD, is due to intragenerational income inequality, raising thepensionable age significantly worsens intragenerational income redistribution for maleparticipants and slightly worsens it for female Workplace-based Insured Persons. This
exacerbates overall income inequality, leading to a deterioration in overall income
redistribution.

33

Figure 4.4 Income Redistributive Effects of the 5th National Pension Reform Plan
Based on Mean Log Deviation (MLD)(Case reflecting differences in contribution periods and life expectancy
across income quintiles)
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect

0.00477780
0.12368756
0.01232903
0.01099840
0.00133063-0.00494473-0.00417287-0.00025261
0.00254812
0.00815273
0.07065293
0.06396100
0.00669193-0.04241038-0.02722656-0.00215003
0.02431903
0.05415988
0.03343109
0.02967611
0.00375497-0.03931020-0.01680339
0.00046525
0.01755089
0.04185242
0.00727451
0.00578589
0.00148863-0.01154853-0.00511773-0.00064155
0.00436086
0.01443558
0.12846536
0.02622996
0.18186499
0.00183385
0.00169449
0.00013936-0.00167480-0.00054963
0.00017705
0.00028330
0.00190342
0.06936274
0.06053792
0.00882482-0.04728284-0.02071644
0.00290585
0.02409390
0.04982435
0.08353929
0.07114808
0.01239121-0.06240182-0.02412517
0.00414280
0.02564635
0.06912906
0.02712912
0.02112318
0.00600594-0.01710327-0.00608937-0.00062002
0.00881090
0.02100769
0.20809496

0.00259180
0.19969447
0.00939895
0.00944917-0.00005022-0.00580417-0.00444890
0.00013543
0.00357066
0.00649676
0.08099264
0.07831183
0.00268081-0.04868109-0.04210451
0.00212884
0.03529212
0.05604545
0.07758694
0.07430119
0.00328575-0.06658633-0.03526441
0.00753637
0.03796782
0.05963231
0.03171594
0.02996781
0.00174814-0.03304805-0.01188351
0.00359801
0.01660590
0.02647579
0.20228627
0.00478982
0.19982290
0.00817112
0.00537913
0.00279200-0.00110739
0.00005065
0.00029931-0.00025074
0.00380017
0.07424611
0.06993413
0.00431198-0.05441336-0.02773737
0.00404028
0.02925458
0.05316784
0.08796072
0.08503524
0.00292547-0.07014471-0.03926444
0.00511340
0.03732741
0.06989381
0.02944495
0.02773680
0.00170816-0.02679471-0.00918435
0.00282186
0.01277135
0.02209400
0.20461272

Proposal 1
0.00038460
0.00008418▲ 0.00007818▲ 0.00007207▲ 0.00000611
0.00002545
0.00003077▲ 0.00001272▲ 0.00002520▲ 0.00002441▲ 0.00076742▲ 0.00078320
0.00001579
0.00024629
0.00036884▲ 0.00006042▲ 0.00023141▲ 0.00030751
0.00035173
0.00014051
0.00021123
0.00003982
0.00005376▲ 0.00007667▲ 0.00006478
0.00025909
0.00057805
0.00048055
0.00009750▲ 0.00015732▲ 0.00012283▲ 0.00005444
0.00002337
0.00040871
0.00046879
0.00059586
0.00332906▲ 0.00013693▲ 0.00010011▲ 0.00003681
0.00000290
0.00001672
0.00002499▲ 0.00001968▲ 0.00006175▲ 0.00032185▲ 0.00003956▲ 0.00028229▲ 0.00007813
0.00005252▲ 0.00005922▲ 0.00005230▲ 0.00014515
0.00232542
0.00227402
0.00005140▲ 0.00074297▲ 0.00041215▲ 0.00038723
0.00012562
0.00146813
0.00146241
0.00137559
0.00008682▲ 0.00042179▲ 0.00025633▲ 0.00024322
0.00017663
0.00083153
0.00392492

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00049176
0.00050318
0.00048904
0.00081312
0.00089565
0.00020906▲ 0.00007818▲ 0.00007818▲ 0.00013187▲ 0.00007207▲ 0.00007207▲ 0.00012065▲ 0.00000611▲ 0.00000611▲ 0.00001122
0.00002545
0.00002545
0.00004248
0.00003077
0.00003077
0.00005136▲ 0.00001272▲ 0.00001272▲ 0.00002152▲ 0.00002520▲ 0.00002520▲ 0.00004244▲ 0.00002441▲ 0.00002441▲ 0.00004111▲ 0.00074431▲ 0.00074376▲ 0.00127539▲ 0.00076618▲ 0.00076572▲ 0.00128598
0.00002186
0.00002196
0.00001058
0.00023389
0.00023360
0.00038966
0.00037726
0.00037724
0.00062691▲ 0.00005532▲ 0.00005522▲ 0.00009953▲ 0.00022736▲ 0.00022720▲ 0.00038720▲ 0.00030660▲ 0.00030646▲ 0.00051926
0.00059804
0.00061406
0.00051279
0.00034612
0.00036019
0.00022272
0.00025192
0.00025387
0.00029008▲ 0.00002518▲ 0.00002868
0.00010226
0.00001072
0.00000720
0.00005465▲ 0.00009809▲ 0.00010144▲ 0.00017415▲ 0.00005030▲ 0.00005116▲ 0.00014853
0.00041477
0.00042795
0.00045585
0.00103757
0.00110352
0.00110352
0.00090540
0.00096609
0.00096609
0.00013218
0.00013743
0.00013743▲ 0.00029038▲ 0.00030429▲ 0.00030429▲ 0.00024852▲ 0.00026408▲ 0.00026408▲ 0.00012430▲ 0.00013919▲ 0.00013919
0.00003755
0.00002472
0.00002472
0.00075782
0.00082027
0.00082027
0.00130488
0.00139882
0.00069810
0.00079581
0.00081346
0.00083544
0.00503980
0.00520160
0.00569645▲ 0.00013693▲ 0.00013693▲ 0.00023259▲ 0.00010011▲ 0.00010011▲ 0.00016877▲ 0.00003681▲ 0.00003681▲ 0.00006382
0.00000290
0.00000290
0.00000480
0.00001672
0.00001672
0.00002814
0.00002499
0.00002499
0.00004201▲ 0.00001968▲ 0.00001968▲ 0.00003413▲ 0.00006175▲ 0.00006175▲ 0.00010464▲ 0.00022119▲ 0.00021546▲ 0.00042923
0.00006966
0.00007558
0.00010584▲ 0.00029085▲ 0.00029104▲ 0.00053507▲ 0.00014897▲ 0.00015190▲ 0.00025117
0.00003738
0.00003504
0.00005858▲ 0.00005064▲ 0.00005106▲ 0.00009504▲ 0.00000508▲ 0.00000076▲ 0.00002605▲ 0.00012354▲ 0.00012236▲ 0.00022139
0.00313778
0.00319380
0.00399809
0.00308406
0.00314320
0.00409126
0.00005372
0.00005060▲ 0.00009317▲ 0.00097904▲ 0.00099068▲ 0.00130995▲ 0.00059714▲ 0.00061115▲ 0.00082163▲ 0.00053594▲ 0.00055189▲ 0.00078915
0.00010557
0.00009461
0.00010996
0.00206026
0.00210971
0.00271760
0.00226013
0.00236018
0.00236018
0.00215497
0.00225612
0.00225612
0.00010515
0.00010406
0.00010406▲ 0.00062761▲ 0.00064996▲ 0.00064996▲ 0.00041881▲ 0.00044020▲ 0.00044020▲ 0.00041180▲ 0.00043705▲ 0.00043705
0.00021025
0.00020571
0.00020571
0.00135312
0.00142556
0.00142556
0.00583561
0.00601506
0.00653189

Proposal 5
0.00249645▲ 0.02210077▲ 0.00007818▲ 0.00007207▲ 0.00000611
0.00002545
0.00003077▲ 0.00001272▲ 0.00002520▲ 0.00002441▲ 0.00417365▲ 0.00390844▲ 0.00026521
0.00036018
0.00215125
0.00048221▲ 0.00094204▲ 0.00231681▲ 0.01399410▲ 0.01417734
0.00018324
0.00660775
0.00522032▲ 0.00256788▲ 0.00429315▲ 0.00478379▲ 0.00385484▲ 0.00404644
0.00019160
0.00353016▲ 0.00008613▲ 0.00113860▲ 0.00144503▲ 0.00066881▲ 0.01960432
0.00393587▲ 0.01088618▲ 0.00013693▲ 0.00010011▲ 0.00003681
0.00000290
0.00001672
0.00002499▲ 0.00001968▲ 0.00006175▲ 0.00076043▲ 0.00155057
0.00079013▲ 0.00041544▲ 0.00401714
0.00591772
0.00082991▲ 0.00152492▲ 0.00860323▲ 0.00819221▲ 0.00041103
0.00095216
0.00199544▲ 0.00013449▲ 0.00081505▲ 0.00240909▲ 0.00138559▲ 0.00180323
0.00041764
0.00055067
0.00145332▲ 0.00078479▲ 0.00082126
0.00001968▲ 0.00695032

Proposal 6
0.00248040▲ 0.02310780▲ 0.00013187▲ 0.00012065▲ 0.00001122
0.00004248
0.00005136▲ 0.00002152▲ 0.00004244▲ 0.00004111▲ 0.00481354▲ 0.00450437▲ 0.00030917
0.00052768
0.00243389
0.00042379▲ 0.00113064▲ 0.00256389▲ 0.01430755▲ 0.01447728
0.00016973
0.00681590
0.00531399▲ 0.00269770▲ 0.00445982▲ 0.00480265▲ 0.00385484▲ 0.00404644
0.00019160
0.00353016▲ 0.00008613▲ 0.00113860▲ 0.00144503▲ 0.00066881▲ 0.02062740
0.00398535▲ 0.01040251▲ 0.00023259▲ 0.00016877▲ 0.00006382
0.00000480
0.00002814
0.00004201▲ 0.00003413▲ 0.00010464▲ 0.00099427▲ 0.00156879
0.00057452▲ 0.00049368▲ 0.00396546
0.00586051
0.00081668▲ 0.00164353▲ 0.00779006▲ 0.00712221▲ 0.00066784
0.00059453
0.00178734▲ 0.00041893▲ 0.00083740▲ 0.00179338▲ 0.00138559▲ 0.00180323
0.00041764
0.00055067
0.00145332▲ 0.00078479▲ 0.00082126
0.00001968▲ 0.00641716

Source: Author’s calculations from the KLIPS data.
Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. The Mean
Log Deviation (MLD) in the absence of a pension system is calculated based on each participant's
lifetime labor income.

34

5Conclusions

This paper conducted simulation analysis on the income redistributive effects ofvarious reform proposals in the 5th National Pension Comprehensive Plan (Draft)announced by the Ministry of Health and Welfare of Korea on October 30, 2023, using
individual data from the Korean Labor & Income Panel Study (KLIPS). It aimed todetermine how each reform proposal affects income redistribution compared to thecurrent system, utilizing lifetime income to estimate income redistribution indicators,
with the Mean Log Deviation (MLD) used as the income redistribution indicator.
Differing from previous studies, this paper has two main distinctions. Firstly, inestimating the lifetime income of each participant, it individually estimates thenumber of future children and whether they will be employed in the future, thus
reflecting the heterogeneity of each participant. Secondly, in calculating the lifetime
pension benefits and lifetime pension contributions for each participant, instead ofassuming that all participants enroll for the same period, it reflects the disparity incontribution periods and life expectancies among income strata, conducting analyses
that are more realistic.
Summarizing the key findings, when considering the disparity in contribution
periods and life expectancies among income strata, reform proposals such as raising
the pensionable age (reform proposals 5 and 6) lead to an overall deterioration inincome redistribution for all participants, regardless of employment status.
Furthermore, it was found that, even when considering the absence of the National
Pension System, over 95% of the income disparity among all participants in the current
system and in the 5th National Pension Reform Plan is due to intragenerational
income redistributive effects. Specifically, the proposal to raise the pensionable age
leads to a worsening of intragenerational income redistribution, resulting in an overall
deterioration in income redistribution. Additionally, the 5th National Pension Reform
Plan exhibit different income redistributive effects across generations. All proposals
worsen intragenerational income redistribution for the middle-aged cohorts (born inthe 1960s and 1970s), while the proposal to raise the pensionable age worsens
intragenerational income redistribution for younger cohorts (born in the 1980s and1990s) as well.
In light of these findings, it is crucial to consider the current income distribution
among National Pension participants and the heterogeneity among income strata whendeliberating on the 5th National Pension Reform Plan in the future. The analysis
presented here underscores the need for discussions on income redistribution from the35

perspective of National Pension function, alongside the stated fiscal goal of achieving
long-term equilibrium in the National Pension finances, given that the income
redistributive effects vary across each proposal. Furthermore, for a more realistic
analysis of income redistributive effects, it is necessary to conduct analyses that take
into account strata that are currently outside the focus of analysis in the National
Pension System, a task that remains a future challenge for this study.

36

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김준일・류재린, “국민연금기금의 사회책임투자와 인구구조 변화: 미시모의실험을 통한38연금재정분석”, 『경제발전연구』, Vol.24, No.4, 2018, pp.65-94. (Translated in
English) Kim, Joon-il and Ryu, Jae-rin, “Social Responsibility Investment of the
National Pension Fund and Changes in the Demographic Structure: Pension
Financial Analysis through Micimetric Experiments”, Economic Development
Research, Vol. 24, No. 4, 2018, pp.65-94.
김현숙, “우리나라 가구의 자녀 수 결정요인에 관한 Count 모형 분석 및 경제적함의”,『한국인구학』, Vol. 30, No. 3, 2007, pp.107-135. (Translated in English) Kim,
Hyun-Sook, “The Economic and Social Implication of Count Regression Models for
Married Women’s Completed Fertility in Korea”, Applied Economy, Vol. 30, No. 3,
2007, pp.107-135.
송헌재, “노동패널 자료를 이용한 우리나라 가구의 출산결정요인 분석”, 『응용경제』,Vol. 14, No. 3, 2012, pp.51-78. (Translated in English) Heonjae Song, “The Analysis
of Household's Fertility Decision in Korea using KLIPS”, Applied Economy, Vol. 14,
No. 3, 2012, pp.51-78.
이상은, “소득계층별 및 세대별 기대여명 차이를 고려한 국민연금제도의 소득재분배
효과”, 『사회보장연구』, 제 22 권 제 1 호, 2006, pp.217~240. (Translated in
English) Lee, Sang-Eun, “The effect of redistributing income of the National
Pension System in consideration of differences in life expectancy by income classand generation”, Social Security Research, Vol. 22, No. 1, 2006, pp.217-240.
이동열・최웅비・김우창, “국민연금의 세대내 세후 소득재분배 효과 분석”,『사회보장연구』, 제 32 권 제 3 호, 한국사회보장학회, 2016, pp.159-174.
(Translated in English) Lee, Dongyeol, Woongbee Choi, and Woochang Kim, “AnAnalysis on the Intragenerational After-tax Income Redistributive Effect of the
National Pension Scheme,” Korean Social Security Studies, Vol. 32, No. 3, 2016,
pp.159-174.
우해봉・한정림, “국민연금의 소득계층별 노후소득보장 효과 분석: 기대여명 격차와재정 안정화 개혁의 효과를 중심으로”, 『사회복지정책』, Vol.43, No.4, 2016,
pp.192-217. (Translated in English) Woo, Haebong and Han, Jeonglim,“Differential Mortality, Pension Reforms, and Old-Age Income Protection Effects of
the National Pension”, Social Welfare Policy, Vol. 43, No. 4, 2016, pp.192-217.
정세은・김종호, “제 5 차 국민연금 재정추계 결과의 주요 내용과 비판적 평가”,『동향과 전망』, Vol., No.119, 2023, pp.213-260. (Translated in English) Jeong,
Seeun・Kim, Jong-Ho, “Key Contents and Critical Evaluation of the Fifth
Actuarial Estimate of the National Pension,” Journal of Korean Social Trend andPerspective (KSTP), Vol., No.119, 2023, pp.213-260.
최기홍, “세대간 회계에 의한 국민연금의 세대간 형평성과 지속가능성 측정”,39

『경제분석』, 제 22 권 제 2 호, 한국은행 경제연구원, 2016, pp.50-89. (Translated
in English) Choi, Ki-Hong, “Intergenerational Equity and Sustainability of the
Korean National Pension: A Generational Accounting,” Economic Analysis, Vol. 22,
No. 2, 2016, pp.50-89.
최기홍・한정림, “국민연금 가입자의 소득계층별 수익성 측정”, 『통계연구』, 제 22 권
제 1 호, 2017, pp.44-64. (Translated in English) Choi, Ki-Hong Choi, and Jeong-Lim
Han, “Measurement of the Profitabilities of the National Pension by Income
Class,” Journal of Korean Official Statistics, Vol. 22, No. 1, 2017, pp.44-64.
National Pension Service (NPS). (n.d.). Standard income monthly amount. Retrieved
May 1, 2023, fromhttps://www.nps.or.kr/jsppage/cyber_pr/easy/easy_03_01.jsp#:~:text=%EA%B8%B0%EC%A4%80%EC%86%8C%EB%93%9D%EC%9B%94%EC%95%A1%EC%9D%B4%EB%9E%80,%EB%B2%94%EC%9C%84%EB%A1%9C%20%EA%B2%B0%EC%A
0%95%ED%95%98%EA%B2%8C%20%EB%90%A9%EB%8B%88%EB%8B%A4
National Pension Service (NPS) Big Data Portal. (n.d.). Number of workplacesubscribers by gender and age (2020) and Number of regional subscribers bygender and age (2020). Retrieved May 1, 2023, fromhttps://data.nps.or.kr/pportal/main/listStandardIncome.do?cmsid=102020103000
National Pension Fund Management Committee. (n.d.). Fund Status. Retrieved
December 10, 2023, from https://fund.nps.or.kr/jsppage/fund/mcs/mcs_02_02.jsp
Dong-A Ilbo. (2018, November 7). President Moon Jae-in orders a complete review of
the national pension reform plan. Dong-A Ilbo Digital. Retrieved August 25, 2023,
from https://www.donga.com/news/Politics/article/all/20181107/92771205/1
Dong-A Ilbo. (2022, February 5). Pension reform agreement among presidential
candidates: If serious, it should be a pledge. Dong-A Ilbo Digital. Retrieved August25, 2023, fromhttps://www.donga.com/news/Opinion/article/all/20220204/111583116/1
Ministry of Health and Welfare, Korea. (2023, June 21). Composition and operation of
the 5th Financial Accounting Committee. Retrieved August 25, 2023, fromhttps://www.mohw.go.kr/menu.es?mid=a10714020200
Ministry of Health and Welfare, Korea. (2023, October 30). 5th National Pension
Comprehensive Operation Plan (Draft). Ministry of Health and Welfare, 81p.
Korea Law Information Center. (2023, September 29). National Pension Act. Retrieved
October 1, 2023, fromhttps://www.law.go.kr/%EB%B2%95%EB%A0%B9/%EA%B5%AD%EB%AF%BC%E
C%97%B0%EA%B8%88%EB%B2%95

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Statistics Korea. (2023, August 30). 2022 Birth Statistics. Retrieved September 1, 2023.
Statistics Korea. (2023, November 29). Population Trends for September and the Third
Quarter of 2023. Retrieved December 1, 2023.
Statistics Korea. (2022, December 6). 2021 Life Table. Retrieved March 1, 2023.
Statistics Korea. (2022, October 20). Future Household Projections (City and Province
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41

Appendix

Figure A1. Assumed Values of Macroeconomic Indicators Used in This Study
Economic variables

Year2023~2030

2031~2040

2041~2050

2051~2060

2061~2070

2071~2080

Real economic growth rate

1.9

1.3

0.7

0.4

0.2

0.2

Real wage growth rate

1.9

1.9

1.8

1.7

1.6

1.6

Real interest rate

1.4

1.4

1.3

1.2

1.2

1.2

Inflation rate

2.2

2

2

2

2

2

Source: Created by the author from "Table 5. Assumptions of Economic Variables in Combined
Scenarios" in the Ministry of Health and Welfare's "The 5th National Pension Financial Estimate
Results" p.7.
Notes: Population and economic outlook will use the median values, which serve as the fundamental
assumptions. The unit is expressed in percentage (%).

Figure A2. Actual and Assumed Values of Standard Monthly Income
Upper limit

Lower limit

Applicable period

2,000,000
3,600,000

70,000220,000

3,600,000

220,000

3,600,000

220,000

3,600,000
3,680,000
3,750,000
3,890,000
3,980,000
4,080,000
4,210,000
4,340,000
4,490,000
4,680,000
4,860,000
5,030,000
5,240,000
5,530,000
5,900,000

220,000
230,000
230,000
240,000
250,000
260,000
270,000
280,000
290,000
300,000
310,000
320,000
330,000
350,000
370,000

1988.11. ~ 1995.3.
1995.4. ~ 2007.3.
2007.4. ~ 2008.3. (Employee)
2007.4. ~ 2008.6. (Employer)
2008.4. ~ 2009.6. (Employee)
2008.7. ~ 2009.6. (Employer)
2009.7. ~ 2010.6.
2010.7. ~ 2011.6.
2011.7. ~ 2012.6.
2012.7. ~ 2013.6.
2013.7. ~ 2014.6.
2014.7. ~ 2015.6.
2015.7. ~ 2016.6.
2016.7. ~ 2017.6.
2017.7. ~ 2018.6.
2018.7. ~ 2019.6.
2019.7. ~ 2020.6.
2020.7. ~ 2021.6.
2021.7. ~ 2022.6.
2022.7. ~ 2023.6.
2023.7. ~ 2024.6.

Multiplying the inflation rate (assumed value) of the fifth National
Pension fiscal estimate by the value of the previous year.

2024.7. ~ 2081.6.

Source: Created by the author from the homepage of National Pension Service (NPS).
Notes: Currency unit is KRW.

42

Table A3. Descriptive Statistics for the Estimation of Number of Children
Variablekid
age
education level

Obs
Mean
Std. dev. Min
36,846 1.442219 0.863746
36,868 33.22263 4.178013

0
16

5
39

36,856 2.741507 0.988337

1

5

employment status!"#$%&!"ℎ#$%& (total labor income of household members

36,868 0.449957 0.497496
36,868 1.979052 2.459094

01
0 7.600903

36,8680 28.00957

homeownershipresidence in a metropolitan area

36,868 0.498861 0.500006

0136,868 0.715037 0.451403

01

36,868 2008.15 7.075877
36,868 6.970082 4.611014

1997
1

2020
19

(No formal education to middle school graduate=1,
High school graduate=2, Junior college graduate=3,
University graduate=4, Graduate school graduate=5)

excluding married women)(Seoul Special City, Gyeonggi Province, Metropolitan
Cities (Busan, Daegu, Daejeon, Incheon, Gwangju,
Ulsan) = 1, Others = 0)

year
region6.7881 3.162861

Source: Created by the author from the KLIPS data.

Table A4. Estimation of Number of Children Using
Generalized Least Squares (GLS) Methodkid

VARIABLESage

0.0605***(0.00105)-0.0657***(0.00466)
0.00566(0.0190)-0.0744***(0.00423)
0.0362***(0.00190)
0.133***(0.00861)-0.123(0.0799)

education level
employment status!"#$%&!"ℎ#$%&
homeownershipresidence in a metropolitan area
year

YES

regionYES

Constant term

-0.886***(0.0892)
36,8345,826-43750.36
6797.60

Observations
Sample size
Log likelihood
Wald chi2(45)Standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

Source: Created by the author from the KLIPS data.

43

Max

Table A5. Descriptive Statistics for Employment Probability Estimation
Male
Variable
employment status
age
age2
kid
kid2
employment experience
residence in a metropolitan area

Obs
Mean
Std. dev. Min
59,193 0.394354 0.488716
59,193 36.63639 7.390114
59,193 1396.838 565.5429
59,193 0.950873 0.967501
59,193 1.840201 2.447556
59,193 0.891119 0.311493

0
25
625
0
0
0

1
57
3249
5
25
1

59,193 0.732131 0.442853

01

59,193 6.309842

0 22.40521(Seoul Special City, Gyeonggi Province, Metropolitan
Cities (Busan, Daegu, Daejeon, Incheon, Gwangju,
Ulsan) = 1, Others = 0)!"ℎ$%&' (total labor income of household members
excluding married women)

homeownershipeducation level

59,193(No formal education to middle school graduate=1,
High school graduate=2, Junior college graduate=3,
University graduate=4, Graduate school graduate=5)

unhealthy condition(Unhealthy = 1, Healthy = 0)marital status
population by city/province
year
region3.08751Max

0.55167 0.497327

0

1

59,191 2.945414 1.034599

1

5

51,963 0.038085 0.191403

01

59,193 0.689085 0.462872
59,193 229829.1 166068.3
59,193 2010.477 6.534704
59,193 6.80915 4.593756

0
3315
1997
1

1
5857722020
19

FemaleVariable
employment status
age
age2
kid
kid2
employment experience
residence in a metropolitan area

Obs
Mean
Std. dev. Min
55,806 0.246103 0.430743
55,806 36.47563 7.473477
55,806 1386.323 572.4163
55,806
1.103 0.971376
55,806 2.160162 2.581674
55,806 0.568201 0.495331

0
25
625
0
0
0

1
57
3249
5
25
1

55,806 0.735082 0.441293

0

1

55,806 5.839738 3.559387

0 22.40521

55,806 0.554295 0.497048

0

1

55,785 2.690687 0.976857

1

5

48,678 0.045236 0.207824

0

1

55,806 0.830896 0.374847
55,806 215160.6 158417.9
55,806 2010.019 6.371594
55,806 6.726123 4.606665

0
3145
1997
1

1
5412892020
19(Seoul Special City, Gyeonggi Province, Metropolitan
Cities (Busan, Daegu, Daejeon, Incheon, Gwangju,
Ulsan) = 1, Others = 0)!"ℎ$%&' (total labor income of household members
excluding married women)

homeownershipeducation level(No formal education to middle school graduate=1,
High school graduate=2, Junior college graduate=3,
University graduate=4, Graduate school graduate=5)

unhealthy condition(Unhealthy = 1, Healthy = 0)marital status
population by city/province
year
regionSource: Created by the author from the KLIPS data.

44

Max

Table A6. Estimation of Employment Probability Using Logit ModelMaleemployment status

VARIABLES

age
age2
kid
kid2
employment experience
residence in a metropolitan area!"ℎ$%&'
homeownershipeducation level
unhealthy condition
marital status
population by city/province
Constant term

Femaleemployment status

Coefficient

Marginal EffectCoefficient

Marginal Effect0.538***(0.0167)-0.00913***(0.000218)
0.285***(0.0406)-0.0806***(0.0138)
0.679***(0.0474)
0.1000(0.239)0.0191***(0.00428)
0.163***(0.0222)0.227***(0.0107)-0.270***(0.0657)
0.212***(0.0380)
3.06e-07(2.77e-07)-5.172***(0.367)0.092

0.453***(0.0190)-0.00737***(0.000247)
0.518***(0.0451)-0.128***(0.0150)
0.837***(0.0321)1.610***(0.287)0.0601***(0.00427)-0.0596**(0.0249)-0.0502***(0.0134)-0.245***(0.0706)-0.170***(0.0470)-2.95e-06***(3.22e-07)-4.795***(0.429)

0.066

year

0.049
-0.014
0.116
0.017
0.003
0.028
0.039
-0.046
0.036
5.23E-08
0.428-0.001
0.075-0.019
0.121
0.233
0.009
-0.009-0.007-0.035-0.025-4.27E-07
0.267

YES

YES

YES

YES

51,9610.2535-26486.845
11497.1

48,6580.2264-21844.672
9225.56

regionObservations
Pseudo R2
Log pseudolikelihood
Wald chi2(45)Robust standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1-0.002

Source: Author’s calculations from the KLIPS data.

45

Table A7. Descriptive Statistics for Future Income Estimation
Male
Variable!"#$%&
age
age2
continuous years of employment
continuous years of employment2
kidmarital status
education level(No formal education to middle school
graduate=1, High school graduate=2, Juniorcollege graduate=3, University graduate=4,
Graduate school graduate=5)

Obs
18,282
18,282
18,282
18,24918,24918,282
18,282

Mean
Std. dev.
MinMax
5.71934 0.435339 1.609438 8.006368
35.60103 5.929402
25
541302.589 439.3385
625
2916
6.302044 5.577653
03770.82426 115.3605
01369
1.014495 0.951569
050.718630.449680
118,2823.364019

0.8974081

518,2820.728586

0.4447020118,2820.010502

0.101943

0

1

16,5860.30170.459010

118,2690.012918

0.1129240

118,2690.210849

0.407923

0118,2690.122393

0.3277480118,26918,26918,2690.223767
0.039794
0.059609

0.416779
0.195481
0.236768

0
0
0

1
1
1

18,2690.004981

0.070403

0118,2690.128414

0.334560

1

18,2690.151185

0.3582390

1

18,26918,282
18,2820.046089
2015.871
7.042938

0.209684
3.449272
4.555748

0
2002
1

1
2020
19

residence in a metropolitan area

(Seoul Special City, Gyeonggi Province,
Metropolitan Cities (Busan, Daegu, Daejeon,
Incheon, Gwangju, Ulsan) = 1, Others = 0)unhealthy condition(Unhealthy = 1, Healthy = 0)

firm size(Large/Medium-sized enterprise = 1,
Small/Micro enterprise = 0)Legislators, Senior Officials,
and Managers
Professionals
Technicians and Associate
Professionals
Clerical Support Workers
Service Workers
Occupation
Sales Workers
Skilled Agricultural, Forestry,
and Fishery Workers
Craft and Related Trades
Workers
Plant and Machine Operators
and Assemblers
Elementary Occupations

year
region46

FemaleVariable!"#$%&
age
age2
continuous years of employment
continuous years of employment2
kidmarital status
education level(No formal education to middle school
graduate=1, High school graduate=2, Juniorcollege graduate=3, University graduate=4,
Graduate school graduate=5)

Obs
6,078
6,078
6,078
6,075
6,075
6,078
6,078

Mean
Std. dev.
MinMax
5.327467 0.446229 2.302585 7.313221
35.91922 6.915953
25
55
1338.013 517.2262
625
3025
5.195226 5.370692
033
55.82996 111.7608
01089
1.019579 0.964114
050.724087
0.447010
1

6,078

3.086542

0.893035

1

5

6,078

0.721948

0.448076

0

1

6,078

0.014149

0.118116

0

1

5,394

0.202818

0.402135

0

1

6,076

0.001810.042514

0

1

6,076

0.203753

0.40282

0

1

6,076

0.186801

0.389783

0

1

6,076
6,076
6,076

0.359941
0.085583
0.066162

0.480022
0.27977
0.248585

0
0
0

1
1
1

6,076

0.000988

0.031411

0

1

6,076

0.020902

0.143068

0

1

6,076

0.039829

0.195573

0

1

6,076
6,078
6,078

0.034233
2017.965
6.853735

0.181842
2.11118
4.703885

0
2008
1

1
2020
19

residence in a metropolitan area

(Seoul Special City, Gyeonggi Province,
Metropolitan Cities (Busan, Daegu, Daejeon,
Incheon, Gwangju, Ulsan) = 1, Others = 0)unhealthy condition(Unhealthy = 1, Healthy = 0)

firm size(Large/Medium-sized enterprise = 1,
Small/Micro enterprise = 0)Legislators, Senior Officials,
and Managers
Professionals
Technicians and Associate
Professionals
Clerical Support Workers
Service Workers
Occupation
Sales Workers
Skilled Agricultural, Forestry,
and Fishery Workers
Craft and Related Trades
Workers
Plant and Machine Operators
and Assemblers
Elementary Occupations

year
regionSource: Created by the author from the KLIPS data.
Notes: Occupations are classified based on the "5th Revision of the Korean Standard Classification of
Occupations" by Statistics Korea. Regions are classified according to the wide-area city and province
codes in the KLIPS as follows: Seoul Special City (1), Busan Metropolitan City (2), Daegu
Metropolitan City (3), Daejeon Metropolitan City (4), Incheon Metropolitan City (5), Gwangju
Metropolitan City (6), Ulsan Metropolitan City (7), Gyeonggi Province (8), Gangwon Province (9),North Chungcheong Province (10), South Chungcheong Province (11), North Jeolla Province (12),South Jeolla Province (13), North Gyeongsang Province (14), South Gyeongsang Province (15), Jeju
Special Self-Governing Province (16), Sejong Special Self-Governing City (19).

47

Table A8. Estimation of Future Income Using Mincer Wage Equation
Regular Employees
VARIABLES
age
age2
continuous years of
employment
continuous years of
employment2
kidmarital status
education level
residence in a
metropolitan area
unhealthy condition
firm size
Occupationyear
regionConstant term

Self-employed &Non-regular Employees
MaleFemale!"#$%&!"#$%&

Male!"#$%&

Female!"#$%&

0.0400***(0.00445)-0.000395***(5.97e-05)

0.0162**(0.00771)-0.000190*(0.000102)

0.190***(0.0234)-0.00247***(0.000331)

0.0520*(0.0300)-0.000678*(0.000394)

0.0105***(0.00122)

0.0223***(0.00219)NONO

9.06e-05(5.74e-05)
0.0453***(0.00323)
0.0937***(0.00711)
0.0748***(0.00301)

9.99e-06(0.000101)-0.0315***(0.00633)
0.0231*(0.0140)
0.0932***(0.00574)

NONO

0.0396**(0.0164)0.400***(0.0357)0.0408***(0.0122)-0.0592**(0.0247)-0.251***(0.0621)0.0546***(0.0179)-0.138***(0.0292)-0.103***(0.0226)0.232***(0.00512)

0.0577(0.0771)-0.0709*(0.0411)0.191***(0.0114)-0.357(0.315)-0.213*(0.111)-0.0101(0.215)-0.148(0.109)

NO

NO

YES

YES

NO

NO

YES

YES

YES

YES

YES

YES

YES

YES

4.318***(0.179)14,8963,552-1745.765
15093.77

4.651***(0.280)4,650
1,893-925.8452

1.871**(0.750)2,531
935-2042.939

4.261***(0.769)1,028
573-766.7597

Observations
Sample size
Log likelihood
Wald chi2(52)Wald chi2(46)Wald chi2(38)Wald chi2(34)Standard errors in parentheses*** p<0.01, ** p<0.05, * p<0.1

3112.141034.86155.85

Source: Author’s calculations from the KLIPS data.

48

Figure A9. Income Redistributive Effects of the National Pension Reform Plan
Male Participants（Case assuming all National Pension participants contribute for 20 years）
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect

0.00139272
0.08056773
0.00491046
0.00447973
0.00043074-0.00513106-0.00194131
0.00026976
0.00218184
0.00505150
0.04149507
0.03732126
0.00417381-0.04816292-0.01863077
0.00012156
0.02051240
0.05033354
0.02802890
0.02446929
0.00355962-0.04285118-0.01530193-0.00001884
0.01644852
0.04528304
0.00613329
0.00459437
0.00153892-0.00956633-0.00375649-0.00061602
0.00322342
0.01225434
0.08196044
0.00914842
0.18229094
0.06740677
0.05657571
0.01083107-0.05685652-0.01824089
0.00267611
0.02121354
0.06203883
0.07865018
0.06247033
0.01617984-0.06989198-0.02167502
0.00375598
0.02314828
0.08084258
0.03623399
0.02809578
0.00813821-0.02193520-0.00953060-0.00032939
0.00787537
0.03205804
0.19143936

0.00071385
0.00560632
0.00018578
0.00006605
0.00011973-0.00080322
0.00013734
0.00034918
0.00036373
0.00007271
0.00215176
0.00075790
0.00139386-0.00880360-0.00040838
0.00297583
0.00406803
0.00356198
0.00255345
0.00048142
0.00207202-0.00738702-0.00007275
0.00166848
0.00363967
0.00422364
0.00071533
0.00010993
0.00060540-0.00157019-0.00027537-0.00004368
0.00056285
0.00193180
0.00632017
0.00148084
0.00447763
0.00144910
0.00080685
0.00064225-0.00640916-0.00242102-0.00070425
0.00276404
0.00741265
0.00196814
0.00054147
0.00142667-0.00552422-0.00313642
0.00020983
0.00194838
0.00792910
0.00106040
0.00036293
0.00069747-0.00293870-0.00090545
0.00034792
0.00059342
0.00360027
0.00595848

Proposal 1
0.00027190
0.00024745▲ 0.00000279▲ 0.00000159▲ 0.00000120
0.00000995
0.00000201▲ 0.00000416▲ 0.00000470▲ 0.00000430▲ 0.00005327▲ 0.00014151
0.00008824
0.00073620
0.00033140▲ 0.00005948▲ 0.00040390▲ 0.00051598
0.00023379▲ 0.00007365
0.00030744
0.00051842
0.00035895
0.00004040▲ 0.00017367▲ 0.00043667
0.00006972
0.00001796
0.00005176▲ 0.00013452▲ 0.00002821▲ 0.00000777
0.00006292
0.00015934
0.00051935
0.00052423
0.00035786▲ 0.00015934▲ 0.00002908▲ 0.00013026▲ 0.00012641
0.00020560
0.00017755▲ 0.00018418▲ 0.00020282
0.00027779
0.00017236
0.00010544▲ 0.00104284▲ 0.00063894▲ 0.00002126
0.00057321
0.00123527
0.00023941
0.00019483
0.00004458▲ 0.00085889▲ 0.00052568▲ 0.00009977
0.00037704
0.00115187
0.00088210

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00037528
0.00039151
0.00041019
0.00035111
0.00037072
0.00019688▲ 0.00000279▲ 0.00000279▲ 0.00000472▲ 0.00000159▲ 0.00000159▲ 0.00000267▲ 0.00000120▲ 0.00000120▲ 0.00000205
0.00000995
0.00000995
0.00001659
0.00000201
0.00000201
0.00000335▲ 0.00000416▲ 0.00000416▲ 0.00000695▲ 0.00000470▲ 0.00000470▲ 0.00000786▲ 0.00000430▲ 0.00000430▲ 0.00000718▲ 0.00007452▲ 0.00007572▲ 0.00017921▲ 0.00019306▲ 0.00019729▲ 0.00033057
0.00011854
0.00012157
0.00015136
0.00100441
0.00102695
0.00164207
0.00040608
0.00040936
0.00066329▲ 0.00009616▲ 0.00009543▲ 0.00016865▲ 0.00053199▲ 0.00054272▲ 0.00088442▲ 0.00066380▲ 0.00067659▲ 0.00110094
0.00030354
0.00030987
0.00024145▲ 0.00013960▲ 0.00015599▲ 0.00026890
0.00044314
0.00046586
0.00051035
0.00095686
0.00106101
0.00177472
0.00058113
0.00062936
0.00089030
0.00001256
0.00000575▲ 0.00021103▲ 0.00034774▲ 0.00039475▲ 0.00067872▲ 0.00075968▲ 0.00083551▲ 0.00126492
0.00012488
0.00013936
0.00013936
0.00002179
0.00001978
0.00001978
0.00010309
0.00011958
0.00011958▲ 0.00016685▲ 0.00014759▲ 0.00014759▲ 0.00000165
0.00002265
0.00002265▲ 0.00000900▲ 0.00001222▲ 0.00001222
0.00008021
0.00006653
0.00006653
0.00020039
0.00019022
0.00019022
0.00072639
0.00076223
0.00060707
0.00073210
0.00075989
0.00071623
0.00042249
0.00042949▲ 0.00009320▲ 0.00023127▲ 0.00023705▲ 0.00043596▲ 0.00005812▲ 0.00006034▲ 0.00009581▲ 0.00017315▲ 0.00017672▲ 0.00034015▲ 0.00008810▲ 0.00007899▲ 0.00017497
0.00031408
0.00031249
0.00050487
0.00023553
0.00024154
0.00038258▲ 0.00029641▲ 0.00030514▲ 0.00049109▲ 0.00033826▲ 0.00034661▲ 0.00056155
0.00030123
0.00029606▲ 0.00002773
0.00021720
0.00022080
0.00026702
0.00008403
0.00007526▲ 0.00029474▲ 0.00129211▲ 0.00128869▲ 0.00175889▲ 0.00088457▲ 0.00093196▲ 0.00122458▲ 0.00005309▲ 0.00005069▲ 0.00013333
0.00068004
0.00066992
0.00085394
0.00163375
0.00167668
0.00196811
0.00035254
0.00037048
0.00037048
0.00026754
0.00027566
0.00027566
0.00008500
0.00009482
0.00009482▲ 0.00133660▲ 0.00142014▲ 0.00142014▲ 0.00082375▲ 0.00089764▲ 0.00089764▲ 0.00014177▲ 0.00014200▲ 0.00014200
0.00060871
0.00070210
0.00070210
0.00177840
0.00185251
0.00185251
0.00115459
0.00118938
0.00062303

Proposal 5▲ 0.00044670
0.00018402▲ 0.00000279▲ 0.00000159▲ 0.00000120
0.00000995
0.00000201▲ 0.00000416▲ 0.00000470▲ 0.00000430▲ 0.00043377▲ 0.00031790▲ 0.00011587
0.00122111
0.00103381
0.00048968▲ 0.00087874▲ 0.00198173
0.00041674▲ 0.00010704
0.00052378
0.00061924
0.00085034
0.00006295▲ 0.00030235▲ 0.00070640
0.00020384
0.00004637
0.00015747▲ 0.00037326▲ 0.00005314▲ 0.00003339
0.00015619
0.00046107▲ 0.00026268
0.00022771
0.00052413▲ 0.00038162▲ 0.00009235▲ 0.00028927▲ 0.00160715
0.00180674
0.00017047▲ 0.00035612▲ 0.00030321
0.00045800
0.00052607▲ 0.00006807▲ 0.00412606▲ 0.00262588
0.00053274
0.00165165
0.00449949
0.00044775
0.00033841
0.00010933▲ 0.00277373▲ 0.00171676▲ 0.00037566
0.00120843
0.00376706
0.00075184

Proposal 6▲ 0.00051794▲ 0.00014269▲ 0.00000472▲ 0.00000267▲ 0.00000205
0.00001659
0.00000335▲ 0.00000695▲ 0.00000786▲ 0.00000718▲ 0.00063573▲ 0.00047699▲ 0.00015874
0.00187422
0.00129839
0.00039607▲ 0.00126734▲ 0.00246008
0.00029392▲ 0.00024159
0.00053551
0.00147812
0.00116621▲ 0.00021054▲ 0.00065799▲ 0.00124029
0.00020384
0.00004637
0.00015747▲ 0.00037326▲ 0.00005314▲ 0.00003339
0.00015619
0.00046107▲ 0.00066063
0.00014236▲ 0.00038375▲ 0.00066526▲ 0.00015757▲ 0.00050769▲ 0.00171664
0.00213545
0.00026517▲ 0.00061769▲ 0.00057399▲ 0.00016624
0.00054233▲ 0.00070856▲ 0.00469511▲ 0.00313743
0.00060625
0.00176743
0.00475029
0.00044775
0.00033841
0.00010933▲ 0.00277373▲ 0.00171676▲ 0.00037566
0.00120843
0.00376706▲ 0.00024139

Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. Selfemployed individuals and non-regular workers classified under regional members, particularly thoseborn in the 1960s, are excluded from the analysis due to insufficient sample size. The Mean Log
Deviation (MLD) in the absence of a pension system is calculated based on each member's lifetime
labor income.

49Male Participants(Case reflecting differences in contribution periods and life expectancy
across income quintiles)
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect

0.00038687
0.10654972
0.01447340
0.01335188
0.00112153-0.01073864-0.00456641
0.00120512
0.00514527
0.01007619
0.06034912
0.05410618
0.00624294-0.06376138-0.02153125
0.00265405
0.02710373
0.06177779
0.02603107
0.02272518
0.00330589-0.03979685-0.01421125-0.00001749
0.01527611
0.04205538
0.00569613
0.00426690
0.00142923-0.00888447-0.00348873-0.00057211
0.00299366
0.01138088
0.10693659
0.02068883
0.18713532
0.00207750
0.00200962
0.00006788-0.00252705-0.00097887-0.00008090
0.00094691
0.00270779
0.07803673
0.06624131
0.01179542-0.06595051-0.02006197
0.00329651
0.02507895
0.06943244
0.07326708
0.05819464
0.01507244-0.06510833-0.02019151
0.00349891
0.02156393
0.07530943
0.03375401
0.02617281
0.00758120-0.02043388-0.00887829-0.00030685
0.00733635
0.02986387
0.20782416

0.00056954
0.22858336
0.01166653
0.01168689-0.00002036-0.01282231-0.00294416
0.00248735
0.00591479
0.00734398
0.09716618
0.09423915
0.00292702-0.10965635-0.01908540
0.01835804
0.04895213
0.06435861
0.08946587
0.08640035
0.00306551-0.10323792-0.01952611
0.01483175
0.04610049
0.06489729
0.03028479
0.02920093
0.00108386-0.03368619-0.00712703
0.00428681
0.01495629
0.02265397
0.22915291
0.00198904
0.24125925
0.00684412
0.00623414
0.00060998-0.00629374-0.00073977
0.00125947
0.00226750
0.00411652
0.09330317
0.08952889
0.00377427-0.09739601-0.02148738
0.01241700
0.04604680
0.06419386
0.10258465
0.09941391
0.00317074-0.11352380-0.02590525
0.01546368
0.05145168
0.07568443
0.03852731
0.03649235
0.00203496-0.03978403-0.00763937
0.00621580
0.01689353
0.02634903
0.24324829

Proposal 1
0.00016836▲ 0.00032219▲ 0.00010566▲ 0.00009772▲ 0.00000795
0.00008498▲ 0.00001270▲ 0.00002711▲ 0.00002624▲ 0.00002688▲ 0.00104164▲ 0.00104308
0.00000144
0.00080618
0.00001425▲ 0.00017240▲ 0.00029965▲ 0.00034694
0.00036878
0.00014095
0.00022783
0.00017166▲ 0.00008181▲ 0.00012281▲ 0.00011106
0.00037184
0.00045634
0.00037959
0.00007675▲ 0.00007561▲ 0.00010352▲ 0.00007568▲ 0.00001251
0.00034407▲ 0.00015383
0.00061841
0.00392984▲ 0.00019326▲ 0.00014619▲ 0.00004707
0.00009249▲ 0.00000549▲ 0.00004808▲ 0.00003605▲ 0.00004994▲ 0.00073647▲ 0.00027804▲ 0.00045843
0.00014433▲ 0.00012021▲ 0.00005202▲ 0.00036174▲ 0.00006878
0.00273022
0.00265706
0.00007316▲ 0.00080162▲ 0.00091716▲ 0.00034552
0.00013408
0.00200339
0.00212935
0.00203035
0.00009900▲ 0.00069923▲ 0.00057821▲ 0.00013629
0.00021464
0.00129809
0.00454824

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00019826
0.00020000
0.00022389
0.00044742
0.00053551▲ 0.00035798▲ 0.00010566▲ 0.00010566▲ 0.00017845▲ 0.00009772▲ 0.00009772▲ 0.00016364▲ 0.00000795▲ 0.00000795▲ 0.00001481
0.00008498
0.00008498
0.00014194▲ 0.00001270▲ 0.00001270▲ 0.00002162▲ 0.00002711▲ 0.00002711▲ 0.00004566▲ 0.00002624▲ 0.00002624▲ 0.00004419▲ 0.00002688▲ 0.00002688▲ 0.00004528▲ 0.00102942▲ 0.00102942▲ 0.00176108▲ 0.00103543▲ 0.00103543▲ 0.00173624
0.00000601
0.00000601▲ 0.00002484
0.00079969
0.00079969
0.00133356
0.00001498
0.00001498
0.00001696▲ 0.00016846▲ 0.00016846▲ 0.00028957▲ 0.00029307▲ 0.00029307▲ 0.00049813▲ 0.00034712▲ 0.00034712▲ 0.00058766
0.00065595
0.00067163
0.00058258
0.00038750
0.00040194
0.00026794
0.00026844
0.00026968
0.00031464
0.00008328
0.00007968
0.00030076▲ 0.00014031▲ 0.00014392▲ 0.00017085▲ 0.00014404▲ 0.00014766▲ 0.00027576▲ 0.00010735▲ 0.00011063▲ 0.00021912
0.00057687
0.00059222
0.00067961
0.00092656
0.00099896
0.00099896
0.00082181
0.00088922
0.00088922
0.00010475
0.00010974
0.00010974▲ 0.00021973▲ 0.00023594▲ 0.00023594▲ 0.00022328▲ 0.00023945▲ 0.00023945▲ 0.00014255▲ 0.00015855▲ 0.00015855▲ 0.00000136▲ 0.00001559▲ 0.00001559
0.00069167
0.00075927
0.00075927
0.00064569
0.00073551▲ 0.00013409
0.00079250
0.00080834
0.00086894
0.00605328
0.00627509
0.00657118▲ 0.00019326▲ 0.00019326▲ 0.00032886▲ 0.00014619▲ 0.00014619▲ 0.00024677▲ 0.00004707▲ 0.00004707▲ 0.00008209
0.00009249
0.00009249
0.00015533▲ 0.00000549▲ 0.00000549▲ 0.00001019▲ 0.00004808▲ 0.00004808▲ 0.00008152▲ 0.00003605▲ 0.00003605▲ 0.00006117▲ 0.00004994▲ 0.00004994▲ 0.00008453▲ 0.00070558▲ 0.08623556▲ 0.00125432▲ 0.00024047▲ 0.00024047▲ 0.00040361▲ 0.00046511▲ 0.08599509▲ 0.00085071
0.00012469▲ 0.21407019
0.00019438▲ 0.00013651▲ 0.06146047▲ 0.00024301▲ 0.00004306
0.00620905▲ 0.00008653▲ 0.00035852
0.07356427▲ 0.00061453▲ 0.00005171
0.10976226▲ 0.00010102
0.00365219
0.00372678
0.00470722
0.00358365
0.00366467
0.00482396
0.00006855
0.00006211▲ 0.00011674▲ 0.00106961▲ 0.00109196▲ 0.00149184▲ 0.00117902▲ 0.00120086▲ 0.00167323▲ 0.00054994▲ 0.00057205▲ 0.00075229
0.00002864
0.00000658
0.00002166
0.00283848
0.00292041
0.00377896
0.00329993
0.00344715
0.00344715
0.00318515
0.00333635
0.00333635
0.00011478
0.00011080
0.00011080▲ 0.00104922▲ 0.00108930▲ 0.00108930▲ 0.00089600▲ 0.00093366▲ 0.00093366▲ 0.00036357▲ 0.00040409▲ 0.00040409
0.00024910
0.00022165
0.00022165
0.00217446
0.00231622
0.00231622
0.00684578
0.00708343
0.00744013

Proposal 5▲ 0.00078155▲ 0.03543512▲ 0.00010566▲ 0.00009772▲ 0.00000795
0.00008498▲ 0.00001270▲ 0.00002711▲ 0.00002624▲ 0.00002688▲ 0.00748276▲ 0.00690870▲ 0.00057406
0.00397836
0.00104178▲ 0.00054500▲ 0.00181908▲ 0.00323012▲ 0.02169939▲ 0.02176823
0.00006884
0.01903551▲ 0.00200054▲ 0.00452201▲ 0.00623707▲ 0.00620706▲ 0.00614730▲ 0.00632594
0.00017864
0.00616278▲ 0.00098558▲ 0.00162936▲ 0.00204864▲ 0.00132056▲ 0.03621667
0.00150086▲ 0.02620123▲ 0.00019326▲ 0.00014619▲ 0.00004707
0.00009249▲ 0.00000549▲ 0.00004808▲ 0.00003605▲ 0.00004994▲ 0.00493467▲ 0.00639394
0.00145927
0.00492328
0.00003289
0.00011091▲ 0.00187638▲ 0.00173143▲ 0.01778516▲ 0.01714249▲ 0.00064267
0.01809508▲ 0.00386640▲ 0.00479646▲ 0.00677561▲ 0.00329928▲ 0.00328814▲ 0.00352801
0.00023987
0.00565356▲ 0.00224442▲ 0.00228887▲ 0.00193035
0.00104995▲ 0.02470037

Proposal 6▲ 0.00081222▲ 0.03681166▲ 0.00017845▲ 0.00016364▲ 0.00001481
0.00014194▲ 0.00002162▲ 0.00004566▲ 0.00004419▲ 0.00004528▲ 0.00837709▲ 0.00772838▲ 0.00064871
0.00458704
0.00103236▲ 0.00069465▲ 0.00206182▲ 0.00351164▲ 0.02210882▲ 0.02214475
0.00003593
0.01946741▲ 0.00208232▲ 0.00474065▲ 0.00643656▲ 0.00617195▲ 0.00614730▲ 0.00632594
0.00017864
0.00616278▲ 0.00098558▲ 0.00162936▲ 0.00204864▲ 0.00132056▲ 0.03762389
0.00149369▲ 0.02595268▲ 0.00032886▲ 0.00024677▲ 0.00008209
0.00015533▲ 0.00001019▲ 0.00008152▲ 0.00006117▲ 0.00008453▲ 0.00550734▲ 0.00662684
0.00111951
0.00504970▲ 0.00009135
0.00011422▲ 0.00215969▲ 0.00179337▲ 0.01682835▲ 0.01582098▲ 0.00100736
0.01764766▲ 0.00449887▲ 0.00497689▲ 0.00680508▲ 0.00237419▲ 0.00328814▲ 0.00352801
0.00023987
0.00565356▲ 0.00224442▲ 0.00228887▲ 0.00193035
0.00104995▲ 0.02445899

Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. The Mean
Log Deviation (MLD) in the absence of a pension system is calculated based on each participant's
lifetime labor income.

50

Female Participants（Case assuming all National Pension participants contribute for 20 years）
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect0.01842276
0.11881846
0.00348887
0.00287760
0.00061127-0.00193873-0.00066043-0.00024045
0.00024175
0.00320912
0.05057124
0.04649581
0.00407543-0.03526103-0.01880932-0.00601387
0.01637350
0.04778615
0.05323569
0.04799176
0.00524392-0.06320138-0.02338870
0.00221130
0.02615525
0.06346747
0.01152266
0.00967212
0.00185054-0.02038394-0.00762651-0.00070400
0.00767381
0.02289118
0.13724122
0.01045556
0.16398256
0.02136183
0.01859388
0.00276796-0.02570511-0.00887076
0.00231985
0.00997599
0.02504799
0.11812614
0.10645843
0.01166771-0.10961386-0.03770509
0.00610426
0.04278002
0.11010239
0.02449458
0.01922310
0.00527149-0.02433676-0.00521582
0.00048872
0.00786948
0.02646586
0.17443812

0.00353252
0.00814504
0.00008284
0.00007242
0.00001042-0.00041431-0.00016606-0.00000613
0.00012523
0.00047170
0.00199019
0.00097526
0.00101493-0.00662078-0.00240882
0.00074517
0.00539162
0.00390774
0.004126660.00120909
0.00291757-0.01156039-0.00199421
0.00365803
0.00546304
0.00735110
0.00194534
0.00020965
0.00173569-0.00233274-0.00069212-0.00032315
0.00103858
0.00404513
0.01167756
0.00161847
0.00575739
0.00081841
0.00029475
0.00052366-0.00303392
0.00008530-0.00098542
0.00111177
0.00334594
0.00396449
0.00196724
0.00199724-0.01290958-0.00646034-0.00023829
0.00607749
0.01552797
0.00097449
0.00016146
0.00081303-0.00168326
0.00033081
0.00022868-0.00084855
0.00278535
0.00737586

Proposal 1
0.00040876
0.00025614▲ 0.00000047▲ 0.00000038▲ 0.00000009▲ 0.00000169
0.00000427▲ 0.00000267
0.00000236▲ 0.00000236▲ 0.00003677▲ 0.00007544
0.00003867
0.00014554
0.00024239
0.00011183▲ 0.00013462▲ 0.00032647
0.00017941▲ 0.00006871
0.00024812
0.00023239
0.00032675
0.00017521▲ 0.00005776▲ 0.00042847
0.00011396
0.00001968
0.00009428▲ 0.00015948▲ 0.00004173
0.00003955
0.00009418
0.00016176
0.00066490
0.00020902
0.00040420▲ 0.00002230
0.00000693▲ 0.00002923▲ 0.00013499
0.00004012
0.00001909
0.00010695▲ 0.00006040
0.00031713
0.00028436
0.00003277▲ 0.00101956▲ 0.00053514▲ 0.00000066
0.00050383
0.00108430
0.00010937
0.00005050
0.00005887▲ 0.00038563▲ 0.00009035▲ 0.00000797
0.00004352
0.00049929
0.00061322

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00062301
0.00066406
0.00054522
0.00036882
0.00039100
0.00021898▲ 0.00000047▲ 0.00000047▲ 0.00000080▲ 0.00000038▲ 0.00000038▲ 0.00000064▲ 0.00000009▲ 0.00000009▲ 0.00000016▲ 0.00000169▲ 0.00000169▲ 0.00000282
0.00000427
0.00000427
0.00000712▲ 0.00000267▲ 0.00000267▲ 0.00000446
0.00000236
0.00000236
0.00000393▲ 0.00000236▲ 0.00000236▲ 0.00000394▲ 0.00005739▲ 0.00006004▲ 0.00010928▲ 0.00011345▲ 0.00011886▲ 0.00018829
0.00005606
0.00005882
0.00007901
0.00022826
0.00024452
0.00036249
0.00035444
0.00036413
0.00057527
0.00013456
0.00013631
0.00022013▲ 0.00021318▲ 0.00022505▲ 0.00034508▲ 0.00044803▲ 0.00046110▲ 0.00073381
0.00021772
0.00021711
0.00009466▲ 0.00014001▲ 0.00015973▲ 0.00029171
0.00035773
0.00037684
0.00038637
0.00048654
0.00056472
0.00109579
0.00056938
0.00061796
0.00090541
0.00024961
0.00025950
0.00011301▲ 0.00018014▲ 0.00022412▲ 0.00048801▲ 0.00076765▲ 0.00084122▲ 0.00123982
0.00020896
0.00023439
0.00023439
0.00001926
0.00001618
0.00001618
0.00018970
0.00021822
0.00021822▲ 0.00016046▲ 0.00012931▲ 0.00012931▲ 0.00001753
0.00000310
0.00000310
0.00008134
0.00008409
0.00008409
0.00012053
0.00011245
0.00011245
0.00016581
0.00014789
0.00014789
0.00099183
0.00105506
0.00076419
0.00033274
0.00035846
0.00025168
0.00054176
0.00054884
0.00038110▲ 0.00003576▲ 0.00003615▲ 0.00007675
0.00000603
0.00000562
0.00000987▲ 0.00004179▲ 0.00004176▲ 0.00008662▲ 0.00017033▲ 0.00017183▲ 0.00028751
0.00007531
0.00008187
0.00011306
0.00001116
0.00000668
0.00002013
0.00015438
0.00016257
0.00024678▲ 0.00011231▲ 0.00012105▲ 0.00017907
0.00040656
0.00040240
0.00027526
0.00036879
0.00036738
0.00044336
0.00003778
0.00003502▲ 0.00016810▲ 0.00141611▲ 0.00145930▲ 0.00177244▲ 0.00070752▲ 0.00069636▲ 0.00092460
0.00007110
0.00012277
0.00010268
0.00075532
0.00077680
0.00084529
0.00133499
0.00129111
0.00158096
0.00017096
0.00018259
0.00018259
0.00006931
0.00007148
0.00007148
0.00010165
0.00011111
0.00011111▲ 0.00055487▲ 0.00057394▲ 0.00057394▲ 0.00008850▲ 0.00004975▲ 0.00004975
0.00000538
0.00002509
0.00002509
0.00003459▲ 0.00000076▲ 0.00000076
0.00070506
0.00071047
0.00071047
0.00087450
0.00090730
0.00063278

Proposal 5
0.00258187
0.00084091▲ 0.00000047▲ 0.00000038▲ 0.00000009▲ 0.00000169
0.00000427▲ 0.00000267
0.00000236▲ 0.00000236
0.00006659▲ 0.00005039
0.00011698▲ 0.00013560
0.00059617
0.00001934▲ 0.00004564▲ 0.00031730
0.00049115▲ 0.00003134
0.00052249▲ 0.00001383
0.00046909
0.00042726
0.00012657▲ 0.00048660
0.00028364
0.00004128
0.00024236▲ 0.00033749▲ 0.00009175
0.00010239
0.00020998
0.00035923
0.00342279
0.00124759
0.00102689▲ 0.00000341▲ 0.00003969
0.00003628▲ 0.00053006
0.00055756
0.00001921
0.00016080▲ 0.00017123
0.00079072
0.00079919▲ 0.00000847▲ 0.00287794▲ 0.00194899
0.00112971
0.00085603
0.00283271
0.00023958
0.00010483
0.00013475▲ 0.00097051▲ 0.00026229
0.00008846
0.00006260
0.00121650
0.00227447

Proposal 6
0.00249533
0.00062763▲ 0.00000080▲ 0.00000064▲ 0.00000016▲ 0.00000282
0.00000712▲ 0.00000446
0.00000393▲ 0.00000394▲ 0.00000802▲ 0.00012231
0.00011429▲ 0.00001865
0.00081837
0.00010264▲ 0.00017693▲ 0.00061114
0.00035281▲ 0.00017391
0.00052672
0.00058332
0.00079473
0.00026118▲ 0.00017274▲ 0.00093977
0.00028364
0.00004128
0.00024236▲ 0.00033749▲ 0.00009175
0.00010239
0.00020998
0.00035923
0.00312297
0.00117180
0.00079853▲ 0.00006851▲ 0.00004723▲ 0.00002128▲ 0.00066116
0.00064652
0.00005926
0.00022814▲ 0.00029405
0.00062745
0.00086933▲ 0.00024188▲ 0.00323088▲ 0.00223744
0.00119004
0.00093084
0.00310557
0.00023958
0.00010483
0.00013475▲ 0.00097051▲ 0.00026229
0.00008846
0.00006260
0.00121650
0.00197033

Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. Selfemployed individuals and non-regular workers classified under regional members, particularly thoseborn in the 1960s, are excluded from the analysis due to insufficient sample size. The Mean Log
Deviation (MLD) in the absence of a pension system is calculated based on each member's lifetime
labor income.

51

Female Participants(Case reflecting differences in contribution periods and life expectancy
across income quintiles)
Absence of NPS The Current NPS
Workplacebased Insured
Persons

Individually
Insured
Persons

Intergenerational EffectIntragenerational EffectBorn in the 1960s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution EffectIntergenerational EffectIntragenerational EffectBorn in the 1970s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1980s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Born in the 1990s
Inter-Income Class EffectIntra-Income Class Effect
1st Quintile Group
2nd Quintile Group
3rd Quintile Group
4th Quintile Group
5th Quintile Group
Income Redistribution Effect0.05500044
0.15197273
0.00878985
0.00711410
0.00167575-0.00508115-0.00269600-0.00021025
0.00200427
0.00765887
0.08765887
0.08022591
0.00743297-0.05418923-0.02569653-0.00728789
0.01962601
0.07498060
0.04564444
0.04114828
0.00449616-0.05418906-0.02005355
0.00189597
0.02242559
0.05441720
0.00987956
0.00829291
0.00158666-0.01747725-0.00653899-0.00060361
0.00657955
0.01962697
0.20697317
0.03979218
0.17596164
0.06153134
0.05586024
0.00567110-0.05597484-0.02291060
0.00158216
0.02606239
0.05691200
0.09804797
0.08836344
0.00968453-0.09098253-0.03129627
0.00506670
0.03550860
0.09138802
0.02033118
0.01595570
0.00437548-0.02020018-0.00432927
0.00040565
0.00653189
0.02196739
0.21575382

0.00517174
0.15201477
0.00565641
0.00575592-0.00009951-0.00692994-0.00236554
0.00050932
0.00334538
0.00534127
0.05429902
0.05202457
0.00227445-0.06192154-0.01994533
0.00538699
0.03151696
0.04723736
0.05798135
0.05433211
0.00364924-0.07256241-0.02102845
0.00917021
0.03465236
0.05341754
0.03407799
0.03123350
0.00284449-0.03971536-0.01272424
0.00309642
0.01918871
0.03299896
0.15718651
0.00749069
0.15157438
0.05457143
0.04950190
0.00506953-0.06134882-0.01823596
0.00653182
0.03150886
0.04661364
0.07384176
0.07110726
0.00273450-0.09067978-0.03022407
0.00798560
0.04554562
0.07010714
0.01988058
0.01849608
0.00138451-0.02563286-0.00683178
0.00276298
0.01150366
0.01958250
0.15906508

Proposal 1
0.00033225
0.00075489▲ 0.00003281▲ 0.00002973▲ 0.00000308
0.00002496
0.00000556▲ 0.00001282▲ 0.00000973▲ 0.00001105▲ 0.00031479▲ 0.00035427
0.00003947
0.00016645
0.00008438
0.00007328▲ 0.00004025▲ 0.00024438
0.00032359
0.00013977
0.00018382▲ 0.00007124
0.00003974
0.00006117▲ 0.00000886
0.00016300
0.00077891
0.00064718
0.00013172▲ 0.00028754▲ 0.00016729▲ 0.00001572
0.00008074
0.00052153
0.00108714
0.00043442
0.00270021
0.00014711
0.00023476▲ 0.00008765▲ 0.00015416▲ 0.00010153
0.00004105▲ 0.00001066
0.00013765
0.00193114
0.00190326
0.00002788▲ 0.00094096▲ 0.00056702▲ 0.00012276
0.00025196
0.00140665
0.00073795
0.00066247
0.00007548▲ 0.00034705▲ 0.00010796▲ 0.00003719▲ 0.00001656
0.00058424
0.00313463

Difference from the Current System
Proposal 2
Proposal 3
Proposal 40.00043093
0.00044171
0.00035310
0.00141670
0.00148997
0.00114488▲ 0.00003281▲ 0.00003281▲ 0.00005498▲ 0.00002973▲ 0.00002973▲ 0.00004969▲ 0.00000308▲ 0.00000308▲ 0.00000529
0.00002496
0.00002496
0.00004166
0.00000556
0.00000556
0.00000924▲ 0.00001282▲ 0.00001282▲ 0.00002144▲ 0.00000973▲ 0.00000973▲ 0.00001628▲ 0.00001105▲ 0.00001105▲ 0.00001847▲ 0.00027375▲ 0.00027234▲ 0.00047381▲ 0.00032178▲ 0.00032059▲ 0.00054285
0.00004803
0.00004826
0.00006904
0.00013831
0.00013800
0.00023054
0.00007693
0.00007662
0.00012769
0.00008486
0.00008455
0.00014096▲ 0.00000603▲ 0.00000589▲ 0.00001486▲ 0.00024604▲ 0.00024503▲ 0.00041527
0.00050247
0.00051903
0.00039758
0.00027783
0.00029126
0.00014805
0.00022464
0.00022777
0.00024953▲ 0.00013378▲ 0.00013719▲ 0.00002439▲ 0.00000325▲ 0.00000663
0.00005244
0.00007033
0.00006695
0.00001984
0.00001951
0.00001691▲ 0.00003430
0.00027183
0.00028773
0.00023594
0.00122079
0.00127608
0.00127608
0.00104335
0.00109296
0.00109296
0.00017744
0.00018312
0.00018312▲ 0.00042498▲ 0.00043776▲ 0.00043776▲ 0.00028724▲ 0.00029994▲ 0.00029994▲ 0.00008641▲ 0.00009917▲ 0.00009917
0.00009584
0.00008424
0.00008424
0.00088022
0.00093576
0.00093576
0.00184763
0.00193168
0.00149798
0.00058518
0.00059611
0.00053358
0.00394869
0.00404326
0.00479165
0.00033155
0.00034409
0.00051061
0.00043021
0.00044317
0.00069785▲ 0.00009866▲ 0.00009908▲ 0.00018724▲ 0.00024736▲ 0.00025097▲ 0.00041275▲ 0.00016824▲ 0.00017177▲ 0.00028024
0.00003164
0.00002807
0.00005515
0.00001093
0.00000729
0.00001709
0.00027435
0.00028830
0.00043351
0.00264252
0.00267884
0.00330502
0.00260423
0.00263994
0.00337388
0.00003830
0.00003889▲ 0.00006886▲ 0.00120144▲ 0.00121172▲ 0.00158954▲ 0.00079640▲ 0.00080651▲ 0.00105889▲ 0.00024978▲ 0.00025977▲ 0.00033745
0.00023998
0.00023096
0.00027362
0.00204594
0.00208593
0.00264338
0.00113005
0.00117876
0.00117876
0.00103269
0.00107919
0.00107919
0.00009736
0.00009957
0.00009957▲ 0.00049067▲ 0.00050414▲ 0.00050414▲ 0.00021772▲ 0.00023122▲ 0.00023122▲ 0.00009039▲ 0.00010269▲ 0.00010269▲ 0.00006380▲ 0.00007733▲ 0.00007733
0.00095995
0.00101494
0.00101494
0.00453387
0.00463937
0.00532522

Proposal 5
0.00370467▲ 0.00009308▲ 0.00003281▲ 0.00002973▲ 0.00000308
0.00002496
0.00000556▲ 0.00001282▲ 0.00000973▲ 0.00001105
0.00128789
0.00104336
0.00024454▲ 0.00085240▲ 0.00031019
0.00063477
0.00047443
0.00029793▲ 0.00127689▲ 0.00164895
0.00037206
0.00187165▲ 0.00035297▲ 0.00010544▲ 0.00045712▲ 0.00058406▲ 0.00007127▲ 0.00028425
0.00021297
0.00105153▲ 0.00053670▲ 0.00032372▲ 0.00036217
0.00038404
0.00361159
0.00438571
0.00629072
0.00404974
0.00407418▲ 0.00002443▲ 0.00329679▲ 0.00052026
0.00173899
0.00053614
0.00151748
0.00175086
0.00209592▲ 0.00034506
0.00060762▲ 0.00253520
0.00057678▲ 0.00080617
0.00181191
0.00071955
0.00058419
0.00013536
0.00022053▲ 0.00053062▲ 0.00012100▲ 0.00039153
0.00095797
0.01067643

Proposal 6
0.00365727▲ 0.00049024▲ 0.00005498▲ 0.00004969▲ 0.00000529
0.00004166
0.00000924▲ 0.00002144▲ 0.00001628▲ 0.00001847
0.00106796
0.00081673
0.00025122▲ 0.00076333▲ 0.00026101
0.00069460
0.00046439
0.00011656▲ 0.00143195▲ 0.00182250
0.00039056
0.00200780▲ 0.00028811▲ 0.00016235▲ 0.00051928▲ 0.00064750▲ 0.00007127▲ 0.00028425
0.00021297
0.00105153▲ 0.00053670▲ 0.00032372▲ 0.00036217
0.00038404
0.00316703
0.00438935
0.00706876
0.00420022
0.00430223▲ 0.00010202▲ 0.00349746▲ 0.00055602
0.00178988
0.00051039
0.00165120
0.00242367
0.00289705▲ 0.00047338
0.00019252▲ 0.00283858
0.00052478▲ 0.00075407
0.00240197
0.00071955
0.00058419
0.00013536
0.00022053▲ 0.00053062▲ 0.00012100▲ 0.00039153
0.00095797
0.01145811

Notes: The age classification for Reform Plan 4 is based on the participants' age as of 2025. Selfemployed individuals and non-regular workers classified under regional members, particularly thoseborn in the 1960s, are excluded from the analysis due to insufficient sample size. The Mean Log
Deviation (MLD) in the absence of a pension system is calculated based on each member's lifetime
labor income.

52