[Gangnam Perspective] Why Anxiety Is Growing in Government Circles

In a recent private conversation, a mid-level official at a government ministry confessed, "There will be a five-year gap before I can receive my pension after retirement, and I have no idea how to cope with that period. As things stand, I see no real option other than applying for early pension payments as soon as I retire," unable to hide his anxiety about a future that looms like a nightmare after leaving public service. However, early pension claims are structured so that benefits are reduced in proportion to the years taken before the official pension benefit starting age. Only about 70% of the full pension is paid, meaning that to avoid a gap, retirees must accept a permanent reduction in their benefits. The more difficult it is for someone to endure this gap, the more likely they are to choose early receipt, which in turn leads to a vicious cycle of lower income throughout old age. This is not a solution; it is simply shifting the burden onto individuals.
The growing problem of income gaps among retired public servants is causing an uproar within the bureaucracy. The number of retired officials pushed into periods with no pension income is rising exponentially, yet the Government of the Republic of Korea’s proposed remedy of rehiring retirees has effectively turned into an empty promise, and no meaningful follow-up measures are in sight. The public servants’ organization has urged an immediate change in the government’s stance to protect retired officials who are being driven into this harsh reality of income gaps.
The social grand compromise reached in 2015 and the pledge to rehire retirees on fixed-term contracts starting in 2024 also remain unfulfilled. Those retiring between 2024 and 2026 face up to two years without pension income, because their Public Officials Pension benefits only begin at age 62. For those retiring between 2027 and 2029, the gap can stretch to three years; for those leaving between 2030 and 2032, up to four years; and anyone retiring from 2033 onward may face as much as a five-year gap. As long as the mandatory retirement age stays at 60, any increase in the age at which pension payments begin automatically means a longer period with no benefits.
An even more serious issue is that new retirees fall into this gap every year. Each time the pension benefit starting age is raised, that year’s mandatory retirees become newly exposed to a period without pension income. Over time, it will be difficult to reduce the number of people experiencing this gap; instead, more retirees are likely to endure longer stretches with no pension. The reality is that, after mandatory retirement, the basic income safety net that the state should guarantee is repeatedly left empty by design.
An income gap in old age can quickly upend a person’s life. On the ground, you hear voices of despair saying, "We worked for the state, but when it comes to retirement, we are told to fend for ourselves." This is not just a problem for those directly affected. Anxiety about life after retirement undermines the morale of those still in service, accelerates departures from public office, and fuels a drain of talent. In frontline roles that require skill and experience, the resulting manpower shortages ultimately harm the public. The first few years after retirement are also when essential expenses such as medical care, caregiving, and housing often increase. Yet income either stops abruptly or drops sharply. As a result, retirees cash out savings and deposits, take on more debt, are pushed into unstable short-term jobs, and become dependent on family support. Even when their health deteriorates, they postpone treatment, and repeatedly cut back on essential spending just to get by. It is no surprise that people say you cannot call it responsible state governance to talk about the sustainability of public services while leaving the minimum income safety net after retirement full of holes.
For most public servants, the mandatory retirement age is 60. Yet the age at which Public Officials Pension retirement benefits begin is being raised step by step depending on the year of retirement. This means that even those who retire at the mandatory age must wait several years before they can receive their pension. The situation is not much different for the National Pension Service (NPS). In fact, as early retirement in the private sector becomes more common, conditions are deteriorating further. Raising the age at which pension benefits start can improve the long-term financial sustainability of pension systems, but it also increases the period without pension income, pushing up poverty rates among older adults and lowering their quality of life.
To address this gap, the government is considering extending the mandatory retirement age, but it remains unclear whether this will actually happen. Given that most public servants prefer an extension of the retirement age over post-retirement reemployment, the authorities need to move more quickly on institutional reforms.
ktitk@fnnews.com Reporter