Can rural elderly groups be supported by increasing the pension contribution rate?

Area of Science:

• Social Sciences
• Economics
• Sociology

Background:

• South Korea's transition from a production-based to a free social insurance system offers a model for East Asian nations.
• The study examines the evolving landscape of social security and pension systems in East Asia.
• Understanding welfare system transitions is crucial for regional economic development.

Purpose of the Study:

• To analyze the impact of increased pension contribution rates on social security participation in South Korea.
• To investigate the role of filial piety and financial support from children in elderly participation in social security.
• To explore the interplay between family pensions and social pensions within multigenerational families.

Main Methods:

• Utilized data from the Korean Longitudinal Study of Aging (KLoSA) for 2006, 2010, and 2012.
• Employed fixed effect analysis within a quasi-natural experiment framework.
• Examined factors influencing participation in pension insurance with reduced replacement rates.

Main Results:

• An increased Korean pension contribution rate showed a limited negative effect on social security participation.
• The financial support and degree of filial piety from children significantly influenced elderly participation, more so than the number of children.
• An alternative relationship between family and social pensions was identified.

Conclusions:

• Filial piety and financial support from children are key determinants of elderly social security participation in South Korea.
• South Korea's experience provides valuable insights for China and other East/Southeast Asian countries reforming their welfare systems.
• Policy considerations should account for the evolving dynamics between family support and social pension schemes.