A New Bismarckian Regime? Path Dependence and Possible Regime Shifts in Korea’s Evolving Pension System
This paper sheds light on the current state and the likely future development of Korea’s evolving pension system by analyzing it from a comparative perspective. It shows that, because of its many institutional layers, the Korean pension system could evolve into one of several different types of pension regimes: if the National Pension Scheme (NPS) were to continue to be dominant and occupational pensions continued to be marginal, a classic Bismarckian system would emerge; if the NPS were to be significantly reduced and occupational pensions were to be significantly expanded, a Bismarckian-light system would be the outcome; if other changes were to occur—such as the conversion of the basic pension into a universal, poverty-preventing pension and the partial replacement of the NPS by a mandatory personal or occupational-pension scheme—a mixed regime would emerge. The paper argues that the emergence and consolidation of a Bismarckian-style, single-pillar system is more likely than the shift to one of the variants of the multi-pillar system, such as the Bismarckian-light and the mixed regime type. Since there are many sources of path dependence that reinforce the Bismarckian path of development, a shift to a different pension regime is very difficult. For example, large accumulated entitlements and the strong redistributive role of the NPS make it difficult to reduce the public, earnings-related pension program, and significant accumulated entitlements and the important role of the severance pay scheme in company financing also make it difficult to expand occupational pensions.
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- Ebbinghaus, Bernhard, 2008. "Reforming Early Retirement in Europe, Japan and the USA," OUP Catalogue, Oxford University Press, number 9780199553396.
- Peter Whiteford & Edward Whitehouse, 2006. "Pension Challenges and Pension Reforms in Oecd Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(1), pages 78-94, Spring.
- Holzmann, Robert & Palacios, Robert & Zviniene, Asta, 2004. "Implicit pension debt: issues, measurement and scope in international perspective," Social Protection Discussion Papers 30153, The World Bank.
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