"Everyone else is retiring"... People who say they'll work until 74: What's going on? [Pension Asset Polarization] 1

The Pension Market for Retirement Preparedness Is Deeply Polarized, with a “420-Fold Gap”


Private Pension Enrollment: 0.1% Among Low-Income Earners vs. 42% Among High-Income Earners

More Than Half of Those Aged 60-64 Receive “Zero” Pensi

Korea's pension asset market has surpassed 2,300 trillion won, while the retirement pension market has topped 500 trillion won, marking rapid growth. At the same time, however, the "polarization of pension assets" is worsening, as disparities between social classes accumulate from pension enrollment through retirement benefit receipt. With the starting line for preparing for retirement varying according to income, workplace size, employment type, and asset ownership, the pension system is becoming a source of new inequality rather than a safety net for old age.

The “polarization of pension assets,” in which disparities between social classes accumulate from pension enrollment through retirement benefits, is worsening. The desired retirement age is 65.9 for regular wage workers in the Seoul metropolitan area, compared with 73.9 for temporary and daily workers outside the metropolitan area. The latter are therefore expected to be pushed into working nearly eight years longer. Getty Images

Enrollment Rates Vary by Income and Workplace Size, with Gaps of More Than 400-Fold

Behind the rapid quantitative growth of Korea's pension market is a deepening polarization, with pension enrollment rates differing by as much as more than 400-fold depending on income level and company size.

For individual pensions (pension savings), which people enroll in voluntarily, a significant gap emerges at the point of enrollment, depending on their capacity to pay. According to the Korea Insurance Research Institute, the enrollment rate for pension savings among workers with annual earned income of 20 million won or less is just 0.1%, effectively negligible. By contrast, the rate among workers earning more than 80 million won is 42.0%, a 420-fold difference. An analysis by Hana Institute of Finance also found that the enrollment rate among people with annual incomes of 40 million won or less was only 1.5%, compared with 49.0% among high-income earners making at least 100 million won, confirming that lower-income groups are almost entirely excluded from preparing for retirement through individual pensions.

Retirement pensions also have a starkly different starting line depending on workers' employment conditions. According to the Ministry of Data and Statistics' "Results of the 2024 Retirement Pension Statistics," the enrollment rate among employees at large companies with 300 or more workers was 70.6%, while it stood at just 11.9% at small businesses with fewer than five employees, a nearly sixfold gap based on company size. Even across all businesses with fewer than 30 employees, the enrollment rate remained in the 30% range. Even among National Pension subscribers, one in three is in "exempt from contribution" status, meaning they cannot afford to make actual payments. This is deepening gaps in coverage across both public and private pensions.

Employment Stability Drives the Wealth Gap: Net Assets of Regular Employees Exceed Those of Temporary and Daily Workers by More Than Twofold

Differences in income and capacity to save based on employment type raise the bar for pension enrollment, directly widening the long-term gap in wealth accumulation.

According to the "2026 Household Economy Report on Workers," released by NH Investment & Securities' 100 Years' Era Research Institute, the average net assets of households of regular employees stood at 499.15 million won, more than twice the 235.5 million won held by households of temporary and daily workers. The gap in financial assets, which provide liquidity and a foundation for retirement investments, was even wider: regular employee households held 174.47 million won in financial assets, 2.7 times the 64.46 million won held by temporary and daily worker households.

Structural imbalances in income and capacity to save are also severe. Annual current income for households of regular employees was 95.19 million won, 2.1 times the 45.34 million won for households of temporary and daily workers. Their annual capacity to save was also more than twice as high: 3,616 won for regular employee households, compared with 17.33 million won for temporary and daily worker households. The result is a vicious cycle in which temporary and daily workers exposed to employment instability are increasingly excluded from preparing for retirement, as they lack the means to build pension savings or long-term investment assets in the first place.

These differences in economic circumstances have also led to extreme disparities in retirement plans. The desired retirement age is 65.9 for regular employees in the Seoul metropolitan area, compared with 73.9 for temporary and daily workers outside the region, meaning the latter are forced to keep working nearly eight years longer, a survey found.

The "Income Cliff" After Retirement: Wealth Gaps Also Determine How Pensions Are Received

Disparities in enrollment and capacity to pay become visible during the "income crevasse" period immediately after retirement - the income gap between retirement and the start of pension payments - and at the final stage of pension withdrawals.

According to the Ministry of Data and Statistics, the pension receipt rate among people aged 60 to 64, who have retired at the mandatory retirement age but have yet to begin receiving National Pension benefits in earnest, is just 44.4%. More than half of people in this age group (55.6%) are enduring an income gap with effectively no pension income - in other words, zero won.

Polarization is also stark at the withdrawal and payment stage. According to NH Investment & Securities' 100 Years' Era Research Institute, the average balance in accounts from which people aged 55 or older receive retirement pensions in installments was 148.91 million won. By contrast, the average balance in accounts cashed out as lump-sum payments was just 18.33 million won.

Workers with more assets receive tax benefits and use their pensions as a stable source of monthly living expenses. Meanwhile, low-income workers and those at small businesses with limited savings deplete their pension assets in lump sums to cover living expenses or repay debt, perpetuating the breakdown of the retirement income safety net.

Leakage from early withdrawals is another factor contributing to polarization. According to the Korea Insurance Research Institute, 17.2 trillion won in retirement pension assets flowed out in 2024 without being used for retirement, due to early withdrawals for purposes such as home purchases and the termination of individual retirement pension (IRP) accounts when changing jobs.

"Because disparities between individuals can accumulate over a long period, from pension enrollment and contributions through asset management and withdrawals and payments after retirement, the pension market can be more significantly affected by polarization than other financial markets," said Jeong Seung-hee, a research fellow at Hana Institute of Finance. "To address polarization in pension assets, above all, we need to pursue institutional improvements that expand pension enrollment among vulnerable groups and enable them to continue making contributions."

"When people have low incomes, they also have small pension balances. If they struggle to make ends meet and withdraw their money early, they lose the opportunity for long-term investment as well. This creates a structure in which income gaps during working years can widen further in retirement," said Youngju Nielsen, a professor at Sungkyunkwan University and head of the Korea Retirement Pension Data Center. "The solution must combine support for enrollment, support for building pension balances, and measures to prevent early withdrawals."

This content was produced with the assistance of AI translation services.