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An Analysis of the Effects of an Estimated National Pension Wealth on an Individual’s Expected Retirement Income Replacement Rate -Focusing on an Estimation Method-

  • Journal of Insurance and Finance
  • 2014, 25(4), pp.3-34
  • Publisher : Korea Insurance Research Institute
  • Research Area : Social Science > Business Management

Honsoo Kim 1 Ki-Hong Choi 1

1국민연금연구원

Accredited

ABSTRACT

This research has mainly focused on two aspects. The one is that we have applied a new panel regression originated from Fullerton and Rogers (1993) to solve the problems which previous research had found in terms of estimating the expected retirement income replacement rate (ERR). Therefore, we combined Korean Labor & Income Panel Study with the National Pension's historical data of the insured. The other is that we have evaluated the effect of the expected National Pension benefits on the individuals' retirement income and the ERR. The ERR of the income quintile and cohorts respectively increases by average 14.4%p and 14.1%p when the expected National Pension benefits are added to the individually annuitized retirement income. Even though there are some methodological issues to combine two data sets, this research can give a possible solution to overcome data limitation to estimate the ERR and the expected NP benefits. We can more accurately estimate the average lifetime income and contribution periods using by the National Pension's historical data of the insured, and also show that there is possible way to combine two data sets based on income classes and age structure in more systematical and relevant manner.

Citation status

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