S.Korea mulls adding national pension benefits to raise birth rate

South Korea's Ministry of Health and Welfare is considering adding national pension benefits for married couples to raise the ever-declining birth rate.

One idea is to expand the maternity credit system, which grants a bonus of 12 months to the pension subscription period for a second child and another 18 for every child thereafter, and advancing the credit disbursement period to immediately after beneficiaries give birth rather than when they are in their pension receiving age, or their 60s.

The Korea Economic Daily on Tuesday said a fiscal calculation committee under the National Pension Service that meets every five years to devise pension reform recently discussed boosting the maternity credit, something the ministry is also examining positively.

Retroactive application of the expanded credit to those with children has not been discussed. 

The proposed changes could be part of pension reform after the government talks with the committee next month, writes a fiscal accounting report in July, devises a draft plan after holding a public hearing in August and submits it to the National Assembly in late October.

Introduced in 2008 to provide pension benefits to stimulate childbirth, the maternity credit system increases the amount of pension received by a beneficiary through extension of the benefit period.

The ministry is considering expanding the credit because of the system's failure to reflect the trend of one-child households. In addition, childbirth credit is given only after a parent reaches retirement age, so many child-bearing couples are unaware of the benefits. Many advanced economies like Germany, Sweden and Japan grant the credit right after a child is born.

"Running a system that the public cannot feel while claiming a seriously low birth rate simply doesn't add up," a ministry official said.

Write to Se-Min Huh at semin@hankyung.com