According to the Government Employees Pension Act, the Government Employees Pension Fund is a liability reserve for annuities such as retirement pension, survivors’ pension and disability pension. The pension fund is comprised of the plan’s contributions and investment income. In the initial stage of the plan’s implementation, pension contribution exceeded pension expenditure and, accordingly, the size of the pension fund continued to increase. However, the fund began to decrease in 1995 when the plan ran into deficit for the first time in its history. This is mainly due to aging beneficiary group and large-scale layoffs in the public sector during the Asian economic crisis (1997~1999). Over the two-year crisis, the fund rapidly contracted from 6.2 trillion won in 1997 to 1.8 trillion won at the end of 2000. Faced with serious financial instability, the government conducted a major reform in 2000. One of the reforms implemented was to subsidize pension deficits with the governments general budget. In the following months the plan transformed into a pay-as-you-go (PAYGO) system, using a small sum of the contingency fund. Contributed by the funds’ investment income, the reserve has steadily recovered its size and stood at 10 trillion-951 billion won as of the end of 2017.
|Year||Financial Status*||Investment Income||Net Assets End of Year|
Investments by sector in 2017 are as follows: the pension fund assets of 17 trillion 756 billion won consist of 8 trillion 74 billion won (45.5%) in the financial sector, 1 trillion 431 billion won (8.1%) in pension loan, 3 trillion 239. 3 billion won (18.2%) in student loan, 4 trillion 571 billion won (25.7%) in housing facilities, and 430 billion won (2.4%) in other outstanding receivables.
|Classification||Financial Sector||Pension Loan||Student Loan||Housing||Outstanding charges etc.||Public Sector||Total|