Authors: Wonjin Jang, Heonjae Song(University of Seoul)
Abstract
We investigated the effect of the public pension wealth on household savings. Using KLIPS (Korean Labor & Income Panel Study) data from 2007 to 2013, we estimate wage equation to estimate pension wealth of national pension and special occupational pension. According to the estimation, pension wealth of the national pension was calculated as ₩145,370,000 while the special occupational pension calculated as ₩221,280,000. We find that national pension and special occupation pension do not have a statistically significant effect. In case of the national pension, we conjecture that this result comes from low rates of pension subscribers and distrust in the national pension scheme. The special occupational pension has relatively high asset substitution effect because of high replacement rate. The the regression result might explain that substitution effect and recognition effect offset each other as a result of 2009 reform which had reduced replacement rate.