IMF Warning: South Korea's pension expenditure growth rate is expected to be the highest among G20 developed countries

The International Monetary Fund (IMF) predicts that Korea’s pension spending will grow the fastest among the G20 (G20) major developed economies by 2030, and healthcare spending growth will also be among the top. This means that rapid population aging is quickly increasing fiscal burdens, and medium- to long-term fiscal responses regarding pensions and healthcare are becoming more urgent.

According to the Fiscal Monitor report on fiscal developments published by the IMF in April 2026, Korea’s pension spending is expected to increase its share of gross domestic product (GDP) by 0.7% over the five-year period from 2025 to 2030. This is the largest increase among the nine countries that the IMF classifies as developed countries within the G20. In the same period, Japan is expected to be 0.2%, the United States 0.5%, Germany 0.3%, France 0.1%, the United Kingdom sees no change, and Australia actually decreases by 0.1%. Even when expanding the comparison to 36 countries and regions included by the IMF, Korea’s 1.5% level ranks third, behind Andorra at 1.5% and Hong Kong at 0.9%, and far above the average of 0.4%.

In the long run, the size of the burden becomes even more significant. The IMF estimates that from 2025 to 2050, the net present value of changes in Korea’s pension spending, as a share of GDP, will be 41.4%. Net present value is a figure that converts future increased spending into a value at the current time, and it is an intuitive indicator of future burdens. Korea’s figure is far higher than the average values of 12.2% for the G20 developed countries, (G7) 11.7% for the Group of Seven G7, and 13.2% for the 36 countries and regions. Among the G20 developed countries, Japan follows with 31.3%, the United States 13.4%, Italy 13.3%, Germany 10.0%, and so on. This means that over the next 25 years, Korea is likely to experience a more rapid expansion of pension spending than other developed countries.

Healthcare and health spending show a similar pattern. Korea’s healthcare spending is expected to increase its share of GDP by 0.9% in 2030 compared with 2025, ranking second among the G20 developed countries, behind the United States at 2.3%. From 2025 to 2050, the net present value of changes in Korea’s healthcare spending is 55.5%, again second only to the United States at 100.9%. This means that not only pension-related costs, but also expenses related to hospital visits, care, and chronic disease management for the elderly are very likely to grow in tandem. This indicates that population aging is simultaneously pushing up the overall welfare expenditure structure.

Experts believe that the backdrop to this trend is South Korea’s exceptionally rapid pace of aging. Kim Woo-chul, a professor in the Department of Taxation at the University of Seoul Metropolitan, explains that as the elderly population increases rapidly, the number of pension recipients surges, and fiscal pressure inevitably grows. The IMF also pointed to population aging as the core reason for long-term expenditure pressure in its Korea Annual Consultation Report in November 2025, and emphasized the necessity of pension reform. At present, the government is holding consultations among relevant departments on a plan to reform the basic pension to be paid to residents aged 65 and above living in the country whose income falls in the bottom 70%. This trend is likely to lead to further, more comprehensive discussions in the future on adjusting the pension structure and fiscal management plans for healthcare and care.