SEOUL, Aug 29, 2024 (BSS/AFP) - South Korean President Yoon Suk Yeol pledged Thursday to reform the country's multi-billion dollar pension scheme, as a looming demographic crisis threatens to upend the payment system's stability.

South Korea has the world's lowest birth rate and a rapidly ageing population. The number of children a woman is expected to have in her lifetime dropped to 0.72 in 2023, far below the so-called replacement rate needed to keep a population stable.

The country's pension fund is the world's third-largest, but with insufficient new contributors due to the demographic crisis, the fund is expected to deplete rapidly.

"We need to fundamentally reform the current pension system, which works poorly for the elderly and has not got the trust of the youth," Yoon said Thursday at a policy briefing.

South Korea's pension fund is valued at more than 1,113.5 trillion won ($834 billion), but projections by the government indicate that the fund's growth will cease by 2041, and it is anticipated to be depleted by 2055.

This is largely because eligibility for full pension benefits was rare in the past, but since then, those able to receive pensions more easily -- baby boomers -- are beginning to retire after a lifetime of contributions.

The reforms will aim to create a sustainable system that provides "intergenerational fairness and income security after retirement" to "restore trust in the National Pension Service", Yoon said.

Nearly two-fifths of Koreans in their twenties and thirties said the pension system needs to be reformed "to ensure that I can receive a pension in the future", a recent poll showed.

Yoon said he would push for reforms acceptable to the young generation who "pay the longest, pay the highest premium, and are the last to receive a pension".

He also announced plans to extend credit benefits to individuals who have children or complete military service, so "there is no gap in the pension subscription period".