Over 4 in 5 unprepared for post-retirement income drop: report

More than 81 percent of Koreans are not prepared for retirement, a study showed Monday.

The result fuels concerns that most Korean adults are likely to experience an income crevice from the point of their retirement, mostly in their early to mid-50s, to 65, when they start receiving pensions from the state-run National Pension Service (NPS).

According to the Korea Insurance Research Institute, 81.3 percent of the respondents said they are concerned about the years of income vacuum and are not prepared. About 12 percent said they were well-prepared.

Over half of the respondents said their primary source of income would be the monthly payout from the NPS pension.

Those born between 1953 and 1968 receive the monthly payout from the state-run pension when they reach the age of 61. The figure for people born in 1969 and after is 65.

About 46.9 percent said savings and savings insurance would be a major source of income.

Less than 10 percent cited privately run pensions, stocks and bonds as income sources.

Some 8.6 percent said they subscribe to personal pensions, while 7.1 percent said they expect rental income from real estate.

Most respondents with a low awareness of the income vacuum need to subscribe to private pensions, the report said.

“Privately managed pensions can be a viable option for those aged 55 and older,” the report said. “The government policy needs to outline measures to help develop a variety of pension products.”

Meanwhile, the funds under management of the NPS incurred over 1.6 trillion won ($1.1 billion) in losses from stock investments.

According to FnGuide, a financial data provider, the state-run pension fund had over 5 percent stakes in 276 listed firms, with their valuation total standing at 138.6 trillion won as of April 17.

This was down from 140.2 trillion won as of Dec. 29 last year.