This paper examines the effect of the introduction of the personal pension on the savings rate in Korea. For this purpose, a formal model of utility maximization which shows the approximation of closed form equations for the personal pension and other forms of private savings is constructed, and the substitution elasticity between these two kinds of savings is estimated. The results of the estimation and a simple simulation show that the introduction of the personal pension in 1994 raised the savings rate. However, this increase in the savings rate came from the provision of a new financial asset rather than from tax incentives. It is also shown that reducing tax incentives has only a trivial effect on the savings rate.