[Responding to Population Crisis] Increased Tax Credit for Pension Savings... Unemployment Benefits for Elderly Workers Under Review

The 2nd Population Future Strategy Vice Ministers' Meeting of Related Ministries

[Asia Economy Sejong=Reporter Kim Hyewon] The government plans to expand tax deductions for pension savings and re-pursue the phased mandatory retirement pension system in preparation for an aging society. It will also actively initiate social discussions on the introduction of a Korean-style continuous employment system and review the application of unemployment benefits for new workers aged 65 and over.

On the 28th, the government held the "2nd Population Future Strategy Vice Ministers' Meeting" at the Government Seoul Office, chaired by Na Kyung-won, Vice Chairperson of the Low Fertility and Aging Society Committee, and announced the "Population Structure Changes and Response Measures" containing these details.

First, to increase retirement income, a multi-layered pension system will be established. The tax deduction for pension savings will be expanded from 4 million KRW to 6 million KRW (combined with retirement pension tax deduction from 7 million KRW to 9 million KRW). Additionally, the retirement lump sum payment will be abolished, and retirement pensions will be gradually made mandatory. Along with this, measures to ease the burden on small and medium-sized enterprise (SME) business owners and workers, such as incentives for early adoption of retirement pensions, will be prepared. The amendment to the Employee Retirement Benefit Security Act is planned to be submitted to the National Assembly in the second half of next year.

To comprehensively understand the income status of the elderly after retirement, the development of comprehensive pension statistics linking public and private pension data is scheduled to be completed by October next year. South Korea's elderly poverty rate is known to be 38.9%, the highest among OECD countries.

Social discussions on extending employment for the elderly, including the introduction of a Korean-style continuous employment system and the reform of a win-win wage system, will also be accelerated. This refers to the procedures for establishing legislation on continuous employment for those aged 60 and over, linked with wage system reform.

Continuous employment incentives for SMEs and mid-sized companies will be expanded from 10.8 billion KRW this year to 26.8 billion KRW next year, and elderly employment support funds will increase from 5.4 billion KRW to 55.8 billion KRW.

Based on social discussions related to continuous employment, the government will review the application of unemployment benefits for new workers aged 65 and over.

To encourage reemployment and entrepreneurship among the elderly, an integrated employment tax credit will be newly established, and support for hiring those aged 60 and over will be expanded. For elderly employment, the SME deduction amount will be raised from 11 million KRW to 14.5 million KRW in the metropolitan area and from 12 million KRW to 15.5 million KRW in provincial areas.

The number of senior job projects will increase from 70,000 to 85,000 for social service types and from 167,000 to 190,000 for private types next year. Public-type jobs will continue to be restructured into jobs with high public value such as care and safety.

Medical, care, and nursing services for the elderly will also be expanded. An integrated assessment system that evaluates medical and nursing care needs and links appropriate services according to health and function will be established within next year, and a pilot project for home medical care centers will be conducted. The government will support private sector entry into elderly care services and consider measures to expand supply by promoting diversification and scaling.

To expand training for residents in regional hospitals and respond to increased medical demand due to aging, consultations on adjusting medical school quotas will be held, and plans for the phased introduction of foreign personnel specialized in elderly care will also be examined.

Employment indicators will be refined to respond to aging by subdividing the age groups in the economically active population survey from "70 years and over" into "70-74 years" and "75 years and over," and related indicators will be provided.