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REFERENCE LINKING PLATFORM OF KOREA S&T JOURNALS
> Journal Vol & Issue
Korean Journal of Applied Statistics
Journal Basic Information
Journal DOI :
The Korean Statistical Society
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Volume & Issues
Volume 28, Issue 6 - Dec 2015
Volume 28, Issue 5 - Oct 2015
Volume 28, Issue 4 - Aug 2015
Volume 28, Issue 3 - Jun 2015
Volume 28, Issue 2 - Apr 2015
Volume 28, Issue 1 - Feb 2015
Selecting the target year
Aging and Pensions: Sustainability and Adequacy
Kwon, Hyukjin ; Park, Yousung ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 593~601
DOI : 10.5351/KJAS.2015.28.4.593
We summarize the twelve papers carefully selected for aging, pensions, and related issues, The twelve novel papers are grouped into three categories: sustainability, adequacy, pension reforms. In particular, these twelve papers include depth and extensive discussions for national pension system and present the direction of the various pension reforms. It will be a great help to policy makers and researchers.
Benefit-Cost Analysis and Sustainability of National Pension
Kim, Seongyong ; Bang, Junho ; Park, Yousung ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 603~620
DOI : 10.5351/KJAS.2015.28.4.603
The National Pension of Korea is a public social security system designed to alleviate social risks and poverty that has had a major impact on the quality of life for the aging population. However, a rapidly aging population and low fertility threaten the sustainability of national pension in Korea. The National Pension Research Institute publishes a nancial projection every ve years; consequently, the government has lowered the entitlements for the sustainability of national pension based on the projection results. The current reform of the pension system that arbitrarily reduces the entitlements might detract from the income security role of the national pension for pensioners without accounting for the highest elderly poverty rate in the OECD countries. We first discuss methods for the financial projection of the national pension in terms of population, subscribers, and pensioner projections in order to estimate the pension reserve fund and the financial depletion year. We also conduct a sensitivity analysis for population variables, institutional variables, and economic variables based on pension reserves and the financial depletion year. We evaluate intergenerational fairness between the income hierarchy by conducting a money's worth analysis. Finally, we investigate the possibility of the sustainability of national pension by adjusting pension contributions and entitlements (income replacement rate). A new dependency ratio shows that a simple reform of the national pension does not secure the sustainability of the national pension without adapting a pay-as-you-go system.
Estimating the Benefit-Cost Ratios by Applying Life-Expectancies of National Pension Old-Age Pensioners
Choi, Jang Hoon ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 621~641
DOI : 10.5351/KJAS.2015.28.4.621
Benefit-cost ratios are estimated using life-expectancies of the national pension old-age pensioners in Korea and a compared to whole nation. To obtain the ratios, future mortalities are estimated by multiplying the ratios of experienced mortalities for old-age pensioners to those of the whole nation and the future mortalities of the whole nation projected on an expanded CBD model. The results indicate that the life expectancies of old-age pensioners are longer than the whole nation that lead to higher benefit-cost ratios for old-age pensioners.
How to Maintain the Financial Stability and Adequacy of Teachers Pension
Park, Yousung ; Jeong, Min-Yeol ; Jeon, Saebom ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 643~661
DOI : 10.5351/KJAS.2015.28.4.643
Korea Teachers Pension (private school pension) is a mandatory pension and a social security system for private school teachers to ensure the stability of subscribers by a supplying pension when they (and their dependents) face future economic risk due to retirement or death. Therefore, the Teachers Pension must provide stability and sustainability in regards to adequacy of income and to function as a pension. However, the Government Employees Pension System (GEPS) of Korea (the most representative special occupation pension) recorded a fiscal deficit in 2001 and with an accumulated deficit that is expected to grow; subsequently, various plans for the reform of GEPS have been actively discussed. The Korea Teachers Pension system is based on the GEPS scheme and is not free from the GEPS discussions on reforms of national pension. The current system for the Teachers Pension needs to be improved because it is expected to be depleted within the next 30 years due to low fertility and an aging population in Korea. This study discusses existing Teachers Pension schemes problems and suggests a projection method and revised plans to improve it. We use long-term financial projections of the Teachers Pension to estimate the fund exhaustion point and the minus balance of the financial scale as well as analyze the supply-demand burden structure that reflects the future population structure to propose Teachers Pension reforms that will improve stability and adequacy.
Financial Projection for National Health Insurance using NHIS Sample Cohort Data Base
Park, Yousung ; Park, Haemin ; Kwon, Tae Yeon ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 663~683
DOI : 10.5351/KJAS.2015.28.4.663
The change of the population pyramid due to low fertility and rapid aging threatens the financial sustainability of National Health Insurance. We construct statistical models for prevalence rates and medical expenses using National Health Insurance Service (NHIS) sample cohort data from 2002-2013. We then project yearly expenditures and income of national health insurance until 2060 that considers various assumptions in regards to future population structure and economic conditions. We adopt a VECM-LC model for prevalence rates and the double exponentially smoothing method for the per capita co-payment of healthcare expense (in which the two models are institution-disease-sex-age specific) to project of national health insurance expenditures. We accommodate various assumptions of economic situations provided by the national assembly and government to produce a financial projection for national health insurance. Two assumptions of dependents ratios are used for the projection of national health insurance income to conduct two future population structures by the two assumptions of aging progresses and various assumptions on economic circumstances as in the expenditure projection. The health care deficit is projected to be 20-30 trillion won by 2030 and 40-70 trillion won by 2060 in 2015 constant price.
Scenario Analysis of Fertility in Korea using the Fertility Rate Prediction Model
Kim, Keewhan ; Jeon, Saebom ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 685~701
DOI : 10.5351/KJAS.2015.28.4.685
The low fertility rate and the unprecedented rapid pace of population aging is a significant factor degrading the national competitiveness and the social security system of Korea. The government has implemented various maternity incentives to alleviate the low birth problem; however, the policy seems in effective to solve the problem of low fertility. This study proposes a conditional birth-order specific fertility rate and investigates the policy effects of fertility transition in Korea to provide a basis for more effective policy development. The use of a conditional birth-order specific fertility rate allows for an effective calculation of the change and the effect in total fertility rate than a birth-order specific fertility rate. We compare the effects of the total fertility rate according to various scenarios that enables us to calculate how the total fertility rate can achieve the current multi-child childbirth support policy of the government and estimate how the total fertility rate can be achieved when focusing on the first or second childbirth support policy. We also summarize the research results on policy development for a practical increase in the childbirth that considers the rapid decrease in women of childbearing age (15-49 years) due to continued low fertility and present the number of childbirths in accordance with the total fertility rate.
Longevity Bond Pricing by a Cohort-based Stochastic Mortality
Jho, Jae Hoon ; Lee, Kangsoo ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 703~719
DOI : 10.5351/KJAS.2015.28.4.703
We propose an extension of the Lee and Jho (2015) mean reverting the two factor mortality model by incorporating a period-specific cohort effect. We found that the consideration of cohort effect improves the mortality fit of Korea male data above age 65. Parameters are estimated by the weighted least squares method and Metropolis algorithm. We also emphasize that the cohort effect is necessary to choose the base survival index to calculate longevity bond issue price. A key contribution of the article is the proposal and development of a method to calculate the longevity bond price to hedge the longevity risk exposed to Korea National Pension Services.
National Pension Income Redistribution: The Case of Early Insureds by Net Benefit Measure
Choi, Ki-Hong ; Shin, Seung-Hee ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 721~739
DOI : 10.5351/KJAS.2015.28.4.721
The importance of the old age income security will increase for an aging society due to the deepening income polarization. The National Pension(NP) is a representative Social Security scheme in charge of old age income security as well as income redistribution for the insured. Studies by Kim (2002), Kim et al. (2003), and Hong (2013) have reported the possibility of unsatisfactory income redistribution of the NP. Recently Choi (2015) attributed those results to an unnoticed defect in the benefit formula. This study is a test for the unsatisfactory income redistribution of the current National Pension using early participants who have now become pensioners. The method aggregates cohorts and combines individual history data before the year 2013 and the results of the actuarial projection model of the 2013 after the year 2014. The results are divided by measures taken. The redistribution is obviously progressive by the income replacement rate; however, it is significantly regressive when measured by the net benefit theoretically as more plausible. Considering the effect of differing lifetime contribution year among income classes, the regressive redistribution will prevail more in the future pensioners.
Long-Term Prospects for a Minimum Living Guarantee by the Public Pension of Korea: Evaluation using Dynamic Micro-Simulation Model
Kwon, Hyukjin ; Ryu, Jaerin ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 741~762
DOI : 10.5351/KJAS.2015.28.4.741
This study examines the long-term prospects for a minimum living guarantee by public pensions for the elderly using a dynamic micro-simulation model. "Elderly poverty" here is an estimate calculated by considering only the public pension income and it means how public pension affects the minimum living guarantee for the elderly. The main results are: First the impact of the public pension system on elderly poverty can be decomposed into economic growth and institutional effect. When considering both effects, the absolute poverty rate of the elderly will be reduced to 20% by the year 2040. But when considering the institutional effect(except economic growth effect), that rate is expected to be a long-term level of around 90%. Second, even if the Basic Pension is indexed to 10% of A-value, the elderly poverty rate is only about 10%p to be reduced further, compared to the current CPI-indexed system. Third, current benefit formula for National Pension does not consider the actual correlation of income level and insured period; consequently, the reversal possibility of the replacement rate appears likely. Fourth, the reform of 2007 improves the sustainability of the National Pension; however, it deteriorates the adequacy of the pension policy, i.e., the past system would be better than the current system in regards to a reduction in elderly poverty. Further discussion is needed on aspects of correct pension reform assessments which is difficult to achieve without understanding the comprehensive benefits and costs to society.
Estimating an Adequate Income Replacement Rate and Suggesting Roles for Pension and Non-Pension Incomes
Kang, Sungho ; Kim, DaeHwan ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 763~779
DOI : 10.5351/KJAS.2015.28.4.763
This study estimate the adequate replacement rate of retirement income by income brackets and suggests roles of pension and non-pension income sources to achieve it for each income bracket. Priori research focused on elderly poverty; however, there has been little discussion about an adequate income level for retirement. We calculate an adequate income replacement rate separately for the poor, middle, and high income group as well as the average level of replacement rate for all groups. We also investigate the gap between the adequate income replacement rates and realized rates, and propose roles for each income source to curtail the gap. It is essential to recognize that the adequate income for retirement is unable to be met only by an annuity. To emove the gap, it is vital to utilize non-pension income although annuity is a primary source for retirement. Especially, the public and private pension plays a role to overcome poverty and live affluent in retirement, respectively.
Why were National Welfare Pension Act of 1973 and the National Pension Act of 1986 Legislated?: From the Viewpoint of Response to the Demographic Bonus
Park, Yitaek ; Lee, Hun-Chang ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 781~805
DOI : 10.5351/KJAS.2015.28.4.781
The National Welfare Pension Act of 1973 and the National Pension Act of 1986 were legislated for an anticipative response to future population ageing. But the enforcement of these acts gained momentum as they became effective tools to realize the present potential demographic bonus. This article investigates the history related to the enactment of these two acts, focusing on these acts' role in raising funds managed by the government (National Investment Fund and National Housing Fund). This article shows the historical origin of full-dress debates on the sustainability of the National Pension Fund.
The National Pension and Restructuring of Intergenerational Contracts
Jung, Haesik ; Joo, Eunsun ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 807~826
DOI : 10.5351/KJAS.2015.28.4.807
Generational contracts are specified into public pensions based on generational solidarity. The Korean National Pension has been reformed with a focus on generational equity with a narrow meaning related to contribution rate and benefit level. As a result, the Korean National Pension has only emphasized generational equity and not contributed to generational solidarity. We investigate changes in the content of the generational contract and propose to reconstruct generational contract to contribute to solidarity with a more comprehensive perspective. A new social contract by reformed pension system should not concentrate on narrowed generational equity. It should be reconstructed in the direction of enhancing efficacy and the stability of generational solidarity with an emphasis on social sustainability. Investment into the next generation would be one of many policy measures to decrease conflicts around intergenerational redistribution and improve the financial stability of the public pension by creating population structure and labor market changes.
Evaluating the Reform in 2015 and the New Reform Plan of the Government Employees Pension Scheme
Lee, Yong Ha ; Kim, Won Sub ;
Korean Journal of Applied Statistics, volume 28, issue 4, 2015, Pages 827~845
DOI : 10.5351/KJAS.2015.28.4.827
This study evaluates and suggests a new reform plan that overcomes the limitations of the Government Employees Pension Scheme (GEPS) reforms in 2015. Research results indicate that the reforms were insufficient in terms of financial sustainability, functional transparency, and equity. Debates on the GEPS reforms will continue until an equitable solution is found. The priority of the next reform plans should lie in the unification of public pension schemes. In contrast to previous reform proposals, this study suggests a reforms plan, which should result in not the parametric change but the structural change in GEPS. The distinctive point of the new reform plan lies in translating a single-tire into a multi-tire pension system. Accordingly, the new GEPS should consist of a 'National Pension Scheme (NPS)', occupational pension (additional pension), and retirement allowance. Newly appointed government employee officials should be enrolled in the NPS. This study stresses that inequality between the public pension systems will be alleviated and a pension system of social solidarity will be established when the NPS develops in to a basic old age income security system for all citizens including civil servants.