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Significance of the Pension System

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Significance of the Pension System


The system was introduced in 1960 as a personnel policy to secure the retirement income of civil servants and their survivors and to encourage long and faithful service by providing pensions or lump sum payments to civil servants who retire after 10 or more years of faithful service, or who retire or die of disease or injury in the line of duty.


  • As Korea’s first public pension system, it is a special occupational pension for career civil servants.
    • Offered only to civil servants under State Public Officials Act and Local Public Officials Act and other employees of state and local governments.
  • The social insurance principle and support principle are combined through the system.
    • A social insurance, where the cost is equally shared by the government and civil servants
    • Fiscal shortages are made up with public finances based on the support principle.
    • Government compensatory grants were introduced when the Public Officials Pension Act was amended in 2000.
    • Germany, France and many other advanced nations have also chosen the support principle for their civil servants’ pension system.
  • Inter-generational support system based on the imposition of contributions
    • Future fiscal balance of the pension is maintained by recalculation of overall financial situation every five years, including long-term financial projections and adequate contribution rates.
  • Comprehensive welfare program for civil servants
    • Comprehensive of pension, retirement allowance, welfare, etc.
    • Significant as a personnel policy aimed at securing high-quality talents, the system also encompasses wages in arrears, as the pension includes a part of the retirement payment.