South Korea’s state-managed pension and insurance funds may dry up earlier than expected, suggesting the need of dramatic changes to cope with demographic trends and funding shortfalls in the foreseeable future, a government report projected.

According to the fiscal outlook report for 2020-2060 by the Ministry of Economy and Finance, state-run National Pension Service, the world’s third largest pension fund, is estimated to return to a net loss by 2040 if conditions remain unchanged from now.

The analysis projects the pension fund would reach total insolvency by 2056. The state retirement fund for teachers also were projected to run out of money by 2049 with losses starting 2029.

Losses from other retirement systems for pubic-sector workers and soldiers should be recouped by the government, adding financial burden to state exchequer.

By 2085, the country will have to use as much as 16.43 trillion won ($13.88 billion) to offset the loss in the retirement fund for public employees, according to data compiled by the Government Employees Pension System. State-managed social insurance programs are facing more imminent risks.

The employment insurance fund designed to provide unemployment benefits and job training for the jobless is likely to be depleted this year amid massive job losses in a protracted slump from the COVID-19 pandemic.

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