AARP
Middle-aged consumers have responded enthusiastically to financial products specifically designed to help people prepare for old age and offer the elderly diverse benefits. When the major banks in Korea introduced financial products for the elderly, $567 million flooded the market.

Advocating for the Best Employer Award: Senior Partners, Seoul, Korea

Korea is aging faster than any other society in the world. According to the 2013 demographics data released by the Korean government, the 65-plus population reached more than six million for the first time, comprising 12.2 percent of the total population. Of course, this ratio is not as high as that of Japan (23 percent), Germany (20.8 percent), United Kingdom (16.6 percent), Russia (13.1 percent), and the United States (13.1 percent). What is notable, however, is how fast the society is aging; by 2020, the rate will increase to 15.7 percent, surpassing the United States and the United Kingdom. By 2030, it is expected to rise to 24.3 percent, making Korea the oldest society in the world.

 

Responding to such an aging phenomenon, Korean citizens have become more interested in government policies toward the elderly. One of the most popular issues is the basic old-age pension for 65-plus citizens. The current government called for the full enforcement of pensions for all 65-plus citizens in its presidential election pledge, but has modified the pledge to only support selective citizens due to its insufficient budget. This has aroused a very controversial debate amongst the political parties in Korea, and the citizens took part in it. More attention has been focused on postponing the official retirement age, and the government and politicians have passed a bill to postpone the retirement age to 60 years old. The logic behind the bill was to give more time for aged workers to prepare for the post-retirement life and to lower the societal cost of retiring senior citizens. Abiding by the new bill, all business entities with over 300 employees in Korea are mandated to gradually postpone the retirement age to 60 by 2016, whereas the current average retirement age is 55.

 

The reason why the public is so sensitive about policies toward the elderly is because senior citizens are not well prepared for old age. According to government figures, less than one-half (45.8 percent) of the population between 55–79 years old receives some form of pension. The average pension allowance is only 380,000 KRW ($360) per month. Although earning a steady income through a job would be an alternative, the employment rate is fairly low (30.1 percent), and the wage level for older workers is not high either (77.7 percent compared to the average wage level for all ages, and the level for older female workers is only one-half the average).

 

Such low preparedness for old age has put a great deal of pressure on the public sector. However, many in the private sector see this as a new opportunity—most notably the financial industry. The major financial firms have created various retirement preparation products, primarily focusing on providing inheritance, tax, and investment consultation services, as well as products preparing for national pension schemes or personal retirement savings.

 

Middle-aged consumers have responded enthusiastically to financial products specifically designed to help people prepare for old age and offer the elderly diverse benefits. When the major banks in Korea introduced financial products for the elderly, $567 million flooded the market. Koreans are now more active than ever in preparing for old age, which is evident in increased participation in pension schemes. While there was hardly any interest in 2007—the year the reverse mortgage was first introduced to the market—more and more people are now paying attention to the fact that the number of the mortgage holders has quintupled in the past 5 years. Immediate annuity, where holders deposit large amounts of money and draw from the enrollment year, has also been popular amongst recent retirees.

 

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There has been an effort to attract elderly customers in the distribution industry as well. The consumer goods industry perceives the 50-plus age group as a potential growth market, which has resulted in the launching of new products that meet the needs of the elderly. There are even new online shopping malls just for senior citizens. Considering how seniors might be less familiar with the online environment, these shopping malls provide product consultation, procurement, and payment by phone when necessary. According to The 2013 Retail Industry Yearbook, published by the Korea Chain Stores Association, the ratio of the purchasing power of 50-plus customers to the total purchasing power has increased from 22.3 percent in 2011 to 33.9 percent in 2012.

 

Likewise, Korea’s social interest in the elderly has increased, which became even more evident during the 2013 Seoul International Senior Expo, held in October. The largest private senior industry exhibition, the Expo is organized annually by Senior Partners (AARP participated as a global partner). During this year’s event, where 20,000 50-plus citizens attended, attention was focused on items for active seniors. The attendees’ area of interest has expanded from health and other limited segments to broader areas surrounding how to spend old age more actively. They have shown interest in leisure, employment, volunteer opportunities, and investment, which reflects their will to have control over their golden years instead of relying on others.

 

A change in senior citizens, themselves, is also fairly significant. Being passive citizens before, they are now more active and dynamic, demonstrated by an increased willingness to voice their opinions in public. For example, the 50-plus population actively supported then-presidential candidate Geun-Hye Park during her presidential campaign. Since her government was inaugurated, older Koreans have continued to raise their voices about various policies regarding the rights of the elderly. This new paradigm indicates that the elderly can take the lead in changing Korea’s societal format.

 

In Korea, however, there is no strong community for retired people such as AARP. Individual communities rooted in a common residential area, religion, or hobby are present. But as senior citizens become more familiar with modern technology, such as social networking services and mobile devices, this is expected to change. Active senior citizens are absorbing new technology and culture quickly, expressing their opinions publicly and forming their own communities. Online communities for the elderly are also growing rapidly. Yourstage.com, an online portal website operated by Senior Partners for 50-plus users, has 400,000 subscribers. This number may not seem significant yet, but its potential for growth is increasing along with the rise in senior citizens’ Internet and smart phone usage.

 

It is worth noting that different forms of media are emerging to represent the voice of the elderly. In 2012, the first issue of Senior Chosun, the first magazine in Korea to target 50-plus readers, was published, and two other monthly magazines will publish their first issues later in 2013. Senior Chosun is published by Chosun Media, which has the largest daily newspaper circulation in Korea, and Senior Partners.

 

Social debate focused on advancing the age-friendly organizational culture has also become more active. The new bill postponing the official retirement age, as mentioned above, is also the result of an increased interest in aged workers. Going along with these developments, Senior Partners, together with AARP, is making every effort to extend the age-friendly culture. As an international partner of AARP, Senior Partners is encouraging corporations and organizations to participate in AARP’s “Best Employer’s Award.” Although a Korean has yet to win this award, I am certain that there will be numerous Korean winners in the near future; many Korean corporations are creating innovative jobs that are suitable for aged workers, building social network infrastructure to include older workers in the information loop, and making lifelong education opportunities to promote stable life after retirement.

 

Aging is an undeniable phenomenon in Korea. The government, along with the private sector, is focusing on the changes that stem from such a phenomenon. There will be more policies focused on, and more goods and services designed for, the elderly. Some people view this situation anxiously; they say that the social conflicts associated with an aging population may become more complicated, or there may be another economic crisis. However, more people realize that an aging population presents an opportunity. I do not view the aging phenomenon as a crisis, and I strongly believe that it is an excellent chance to explore new opportunities. Of course, such an optimistic perspective necessitates proper preparation and befitting efforts. I dearly hope that support from the government and active investment from private corporations will be encouraged.

 

about the author

Eun-Kyung Park is the head of Senior Partners, a seniorspecialized platform operating company established in 2007 that leads the senior industry in Korea. Senior Partners covers a range of areas in the senior industry and includes programs such as Yourstage.com (an online portal website for senior citizens); the Seoul International Senior Expo (an exhibition that shows the present and future of the senior industry in Korea); a retirement preparation class (a stepping stone to successfully prepare for the postretirement life); Senior Chosun (a magazine where seniors can voice their concerns); and Home Instead Senior Care (nonmedical home care services that help seniors live at home as long as possible).

 

Recently, Senior Partners, along with AARP, has made efforts to advance the age-friendly organizational culture in Korea. Senior Partners plans to globalize, using its local and international network to provide consultation services to foreign corporations that wish to enter the Korean market.

 
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