'KDI-WB Capacity Building Program: Demographic Change and Pension Systems in EAP' successfully completed

• From April 16th to 19th, 2024, the “KDI-WB Capacity Building Program: Demographic Change and Pension Systems in EAP” was jointly hosted by the Korea Development Institute (KDI) and the World Bank (WB). 

  The KDI Global Knowledge Exchange and Development Center (GKEDC) organized this program to provide countries in the East Asia and Pacific region (EAP) with opportunities to develop and reform their pension systems in response to rapid demographic changes. The program aimed to discuss both Korean and international practices of pension systems, as well as key issues related to reform. 
  
  Government officials from the relevant departments of Cambodia, Indonesia, Malaysia, Mongolia, and Vietnam, all of which are currently pushing for pension system reforms, participated in the program. Experts from the WB country offices responsible for social security projects in these countries also joined the program. 

• The program encompassed ▲ thematic sessions, ▲ field visits, and ▲ action plan activities covering various topics under the overarching theme of “Demographic Change and Pension Systems.”

  Over four days, the program featured thematic sessions and field visits focusing on various sub-topics such as narrowing the pension gap, civil servant pension systems, social pensions, parametric and structural reforms, and pension administration.
  
  Especially with the deepening aging population issue, the program aimed to practically enhance the policy capabilities of the participating countries. Participants were encouraged to establish country-specific action plans and draw policy implications centered around key questions on pension reform.

  

• The program began with a framing session that provided a bird-eye view of the EAP, international trends, and the history of Korean pension system development, followed by various thematic sessions composed of lectures and discussions by experts.

  The framing session commenced with keynote presentations by Yoonyoung Cho (Senior Economist, WB), Robert Palacios (Lead Economist, WB), and Young Jun Chun (Professor, Hanyang Univ.). Their presentations analyzed and provided insights into “Demographic Change and Pensions in EAP,” “Global Pension Policy and Practice: Past, Present and Future,” and “History of Pension System in Korea.” 
  
   In Thematic Session 1, Robert Palacios (Lead Economist, WB) detailed international examples of incorporating informal sector workers into pension systems. Hyungpyo Moon (Former Minister, Ministry of Health and Welfare) shared Korea’s experience in expanding pension coverage and discussed implications for the EAP.

  

  
   In Thematic Session 2, Fiona Stewart (Lead Financial Sector Specialist, WB) addressed global investment trends in pension funds, focusing on portfolio diversification and governance based on international examples inlcuding Canada. Ju Yoel Kim (Senior Portfolio Manager, National Pension System) delved into the overall process of asset allocation, including the fund’s performance targets, management policies, and risk management.
  
  Thematic Session 3 featured presentations from Himanshi Jain (Senior Social Protection Specialist, WB), Ajay Shah (Co-founder, XKDR Forum), and Huck-Ju Kwon (Professor, Seoul National Univ.). They discussed “International Experience in Civil Service Pension Reform”, “The Indian Pension Reform” and “Korea’s Civil Service Pension Scheme and Reform Options”, respectively. This was followed by a lively Q&A session centered around the delegation from Indonesia, where active discussions on civil service pension reform are ongoing. 
  
   In Thematic Session 4, Robert Palacios (Lead Economist, WB) underscored the global status and major discussions surrounding the adoption of social pensions. Sangho Kim (Professor, Gwangju Institute of Science and Technology), detailed the background and operational system of Korea’s basic pension system and analyzed related issues such as elderly poverty rates and financial burdens.
  
  Thematic Session 5 included presentations by Dohyung Kim (Professor, Myongji Univ.), who introduced current parametric reform proposals related to Korea’s National Pension. Do Hun Kim (Research fellow, KDI) highlighted the limitations of parametric reforms and shared a recent proposal for structural reform of Korea’s National Pension suggested by KDI. A comprehensive discussion between presenters and WB experts followed to encourage the exchange of knowledge on parametric and structural reforms.
  
  In Thematic Session 6, Serena Rhee (Professor, Chung-Ang Univ.) lectured on the status and future direction of Korea’s long-term care insurance system as a response to population aging. Mi Gon Kim (President, Korea Labor Force Development Institute for the aged) introduced various senior employment support programs currently being implemented in Korea.
  
  The series concluded with Thematic Session 7, where Hyunsoo Choi (Research Fellow, Korea Institute for Health and Social Affairs) presented on the use of digital technologies such as AI and big data in various government pension system projects.

• Meanwhile, the country delegations engaged in various action plan activities, including country report presentations, country group discussions, and action plan presentations. Through these activities, they explored future directions by comparing reform plans across different countries and engaging in consultations and Q&A sessions.

  As the first step towards establishing action plans, representatives from Cambodia, Indonesia, Malaysia, Mongolia, and Vietnam each reported on the current status and ongoing discussions of pension systems in their respective countries. This set the groundwork for developing practical policy implications based on key questions for pension reforms. These questions would eventually form the basis for the country-specific action plans, the final output of the program.
  
  In the second phase, during the country group discussions, the participants, alongside the WB’s Task Team Leaders, utilized the learning and insights gained during the program to draft action plans considering the specific situations of their countries. 
  
  After all thematic sessions were completed, representatives from the five countries presented the action plans they had developed during the program period. Expert panelists, including Dr.Moon, Dr.Yoon, Mr.Palacios, and Ms.Stewart provided feedback on each country’s action plan.

  
  
   

• This program provided a vital opportunity in the EAP, all of which share a common concern about aging populations and pension system reforms, to discuss reform ideas and elaborate on their national strategies and cases during the action plan development process. 

  The five participating countries all recognize the importance of pension systems as a response to rapid population aging. However, due to immature systems and financial difficulties, they are in the process of discussing and planning national pension reforms. In this context, the participants evaluated this capacity building program as an opportunity to discuss various precedents related to pension systems in Korea and the participating countries and to broaden their thinking for reform efforts. 

  Written by:
  Eunsun Hong, Research Associate, Global Knowledge Cooperation Team 1,  02-6312-4016, ehong@kdi.re.kr