Pensions at a Glance 2025: Korea
Table of contents
This country note shows how Korea compares with other OECD countries in Pensions at a Glance 2025. This edition covers recent pension reforms and includes a focus on gender pension gaps.
The average disposable income of older people relative to that of the total population is one of the lowest in Korea at 68% compared to an OECD average of 87%. Those aged 66-75 fare better than those aged 76+, at 76% and 57%, respectively, primarily due to having been able to contribute to an old-age pension during more of their working lives. As the pension system continues to mature, more new retirees will have been able to contribute for more years, further raising their income. The relative income of people aged 66-75 years increased by 11 percentage points since 2011. Moreover, the relative income poverty rate is the highest of any OECD country for the 66+ age group, at 40%, although it has fallen from 48% in 2011.
Percentage of those aged 66+ with income lower than 50% of median household
Source: OECD Income Distribution Database.
Gender gap in expected lifetime earnings, in percentage points, 2022
Source: Figure 2.16.
Older women are much worse off than their male counterparts. Among the 66+, their average income is 63% of that of the total population compared to 76% for men. This gender income gap has increased by 3 percentage points from 10 p.p. in 2011, as partly a result of a larger proportion of men now receiving pensions and at higher levels than women. Similarly, the decline in the old-age poverty rate has been faster for men than for women, thereby widening the gender difference from 8 to 12 percentage points since 2011. The causes of the gender old-age income gap are numerous but fundamentally gaps in employment duration and wages transmitted from the working-age are the main contributing factors. Under 40% of all those aged 65+ receiving a contributory pension in Korea are women while women account for 56% of the population group. The gender gap in hourly wages is the largest of any OECD country at 28% compared with an average of about 11%. Combining the differences in the expected duration of working life, hours worked and hourly wages between men and women gives an expected gap in lifetime earnings of 50% in Korea against an OECD average of 35%. Policies such as labour market flexibilisation and the promotion of vocational training to support reemployment of older workers, especially female workers, are becoming increasingly important and should narrow gender gaps.
The old‑age to working‑age ratio in Korea is projected to more than double over the next 25 years. On average across the OECD, the number of people aged 65+ per 100 people aged 20 to 64 is projected to increase from 33 in 2025 to 52 in 2050 while it was 22 in 2000. For Korea it was only 11 in 2000 but has increased to 31 today and is projected to be 80 by 2050, at which point Korea would be the oldest country in the OECD based on this indicator, just above Japan. Life expectancy is projected to increase by around 4 years over the next 40 years, both in Korea and on average across the OECD. However, the total fertility rate in Korea has fallen from 1.7 to 0.7 over the last 30 years. Over the same time the OECD average has gone from 1.8 to 1.5. By 2064, the total population aged 20-64 is projected to halve, boosting the old-age to working-age ratio.
Korea currently has the highest employment rate of older workers in the OECD, along with Japan, with 57% of 65-69 year-olds employed in 2024 compared to 26% on average in the OECD. Consequently, the effective age of labour market exit is also one of the highest in the OECD for men, at 67.4 years behind only Chile, Iceland, Mexico, Israel and Colombia. For women the effective age is 69.6 years, more than two years higher than for any other OECD country and six years above the OECD average.
In April 2025, Korea undertook a major pension reform that incorporates several recommendations of the 2022 OECD Korea Pension Review. The mandatory pension contribution rate is increasing from 9% to 13%, split evenly between employees and employers. The future target replacement rate is increasing from 40% to 43% for an average earner with 40 years of contributions as the annual accrual rate is increasing from 1.0% to 1.075%. Overall, the long-term financial sustainability of the system will improve as a result. Prior to the reform, the National Pension Fund was projected to start having an annual deficit from 2041 and a full depletion by 2057. With the reform, these are projected to be delayed by 7 or 8 years, to 2048 and 2065, respectively. The position of future female pensioners should also improve with childcare credits now being granted from the first child rather than only from the second child before the reform, a measure which should help address gender disparities as women are normally the primary carer. Yet, based on the OECD pension model, full-career average wage workers starting their career at age 22 in 2024 will have a net replacement rate of only 39% in Korea compared to the OECD average of 63%. Low earners will have a higher replacement rate of 55% in Korea due to the inbuilt redistribution of using the average wage of all contributors for part of the pension calculation, still well below the OECD average of 76%.
To keep improving retirement-income prospects in a financially sustainable way, much more needs to be done along the line of the recommendations in the OECD Pension Review. In Korea contributions are only made until age 60, resulting in no increase in accrual beyond that age. All years of employment should lead to higher pension entitlements. Employment legislation also allows for mandatory retirement at age 60, three years before the normal retirement age, with Japan and Korea being the only OECD countries allowing for mandatory retirement before the normal retirement age. Extending the contribution period to at least the normal retirement age would raise pension entitlements. Although the contribution rate is increasing to 13% this is still very low in international comparison, especially for a society that is ageing very fast. Additional increases to the contribution rate will allow to further raise pension benefits and improve the financial sustainability of the system depending on policy priorities.
Levels of old-age poverty are very high
Population ageing will be faster than in any other country
Retirement age, pension spending and pension assets are below OECD average
Future net replacement rates are well below the OECD average across earnings levels
Contact
Andrew REILLY (✉ andrew.reilly@oecd.org)
Hervé BOULHOL (✉ herve.boulhol@oecd.org)
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The full book is available in English: OECD (2025), Pensions at a Glance 2025: OECD and G20 Indicators, OECD Publishing, Paris, https://doi.org/10.1787/e40274c1-en.
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