The International Monetary Fund(IMF) has recommended that South Korea raise its retirement age from 60 to 65 and implement other structural reforms to mitigate the adverse effects of its rapidly aging population.

In an IMF report titled “Healthy Aging and Labor Market Participation in Korea,” published on Monday, the global organization proposed raising the statutory retirement age and increasing the pensionable age to retain older workers in the labor force.

Citing Organization for Economic Cooperation and Development findings, the IMF estimated that raising the pensionable age to 68 by 2035 could boost total employment by 14 percent and gross domestic product by 12 percent by 2070.

It stated that longer-term reforms to the pension system are essential to the pension fund's fiscal sustainability. 

The report also advised restructuring the county’s seniority-based wage system as a complementary measure to help ensure elderly workers continue working until the mandatory retirement age.

The IMF added that such an overhaul will strengthen the link between productivity and wages and reduce employers' labor costs, which may discourage early retirement and allow older workers to remain in their regular jobs longer.