IMF: "If Korea Extends Retirement Age, Pension Eligibility Should Be 68... Wage System Also Needs Reform"

IMF Releases Report on Extending Retirement Age in South Korea
Highlights Key Tasks for Raising Retirement Age
Pension Eligibility Age Should Be Raised to 68
Calls for Shift from Seniority-Based to Performance-Based Wage System

An international organization has evaluated that, for South Korea to extend its retirement age, it must raise the national pension eligibility age to 68 and also reform its rigid wage system.

Reuters Yonhap News

On November 26, the International Monetary Fund (IMF) released a special report on South Korea titled "Healthy Aging and Labor Market Participation In Korea," which included these recommendations. It is considered unusual for the IMF to address the retirement age issue of a specific country in such detail.

The IMF suggested raising the retirement age from 60 to 65, but also emphasized the need to increase the national pension eligibility age to 68. Citing research by the Organisation for Economic Co-operation and Development (OECD), the IMF explained that delaying the eligibility age to 68 by 2035 would increase total employment by 14 percent, and, assuming the productivity of older workers is maintained, South Korea's gross domestic product (GDP) in 2070 would rise by 12 percent.

The IMF also stated that the country needs to restructure its rigid wage system. The organization pointed out that extending the retirement age without shifting from a seniority-based wage structure to a performance- and job-based system could lead to negative side effects. The IMF further noted that improving systems that protect regular workers could increase both output and employment.