The expected return rate for children born this year when they later pay pension premiums raises significant concerns about the sustainability of South Korea's pension system, as the future generation's pension benefit ratio is projected to be 0.5. 

Among the ongoing pension reform discussions, increasing pension premiums is presented as the primary solution, but this measure alone is far from sufficient to prevent the depletion of the National Pension Fund. If pension finances are depleted, the system may transition to a pay-as-you-go model, requiring individuals to bear up to 35% of their income as pension contributions. 

This would place South Korea in an even more dire situation than Italy, which has been dubbed 'the sick man of Europe.' The pension benefits would amount to only 44% of the principal paid, reducing its economic utility to the level of mere pocket money rather than a sustainable retirement income. The potential consequences of such a transition are severe, as it would significantly increase the financial burden on individuals and reduce the economic utility of the pension system. 

As an alternative solution to this issue, the 'fully funded new pension' system has been proposed. This system aims to maintain an expected return rate of 1, ensuring stable pension payments that include both the principal contributions and accrued interest. The existing Defined Benefit (DB) system operates on a pay-as-you-go basis, where the pension contributions paid by the current working generation are used to fund the pensions of retirees. 

This system functions as an intergenerational income redistribution mechanism, guaranteeing a certain level of pension benefits. However, not all of the problems with South Korea's pension system can be solved by pension reform alone. Any kind of pension reform will unavoidably encounter obstacles if structural issues like low birth rates and an aging population are not addressed. 

The long-term sustainability of the pension system is significantly impacted by dropping birth rates, specifically since fewer young workers are available to support pension finances. Therefore, long-term demographic strategies targeted at raising birth rates must be pursued concurrently with pension reform. By doing this, the pension system's stability may be further strengthened, and the burden on future generations can be lessened.

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