After 10 months of discussion, national pension experts unveiled a ‘pay more, receive later, same’ reform plan and began the process of collecting public opinions on pension reform. However, the financial stabilization camp and the income security strengthening camp are in sharp conflict, unable to reach an agreement and publishing a report containing only financial stabilization plans, increasing the conflict. Although the first step toward national pension reform has been difficult, the noise surrounding the income replacement rate (the ratio of the pension amount to be received compared to the average income during the pension subscription period) is likely to become a detonator in the future.
The 5th National Pension Financial Calculation Committee, a government advisory body that discusses plans to reform the National Pension, held a public hearing at COEX in Gangnam-gu, Seoul on the 1st and announced a draft for system improvement. The plan is to maintain the reserve fund until 2093 by increasing the insurance premium rate from the current 9% to 12-18%, raising the payment start age from 63 this year to 66-68, and increasing fund management returns.
Even though the insurance premium rate among the 18 scenarios was weighted around 15%, it was not specified in detail, and ultimately, it was up to the government and the National Assembly to decide on the insurance premium rate and payment start age. Kim Seol, CEO of the Youth Union, who attended the public hearing debate on behalf of the youth generation, pointed out, “I am not sure which plan to discuss due to the wide range of options in parallel,” and added, “We need a clear will on how to persuade the people.”
Professor Kim Yong-ha of Soonchunhyang University, chairman of the Financial Calculation Committee, seemed to be aware of this point, saying, “We presented 18 scenarios as a basis for judgment that can be used as a reference for how to maintain the fund until 2093, when a young person currently 18 years old will receive old-age pension in the future.” He countered by saying, “Until now, we have never provided this much information in the financial calculation process.”
The income security camp resigned from its position as an expert committee member the day before, saying, “We have lost balance.”
There is no income replacement rate part in the system improvement plan presented by the Financial Calculation Committee on this day. It is unusual that adjustments to the income replacement rate, which is the key to strengthening retirement income, are not included, because there have been repeated failures in the discussion process so far.
The income security camp argued that the income replacement rate, which will be lowered to 40% in 2028 (42.5% this year), should be raised to 45-50%. However, the fiscal stabilization camp, which has a numerical advantage, said, “If included, the increase is a minority plan, and the maintenance is only a small number.” “It must be indicated that it is a majority bill,” he countered. Two members of the fiscal calculation committee from the income security camp protested against this and resigned from their positions the day before, saying, “We will prepare an alternative report.”
Yoo Jeong-yeop, policy director of the Federation of Korean Trade Unions, who participated in the public hearing as a subscriber, said, “Considering that the original purpose of the national pension is to stabilize life after retirement, the Financial Accounting Committee cannot help but be seen as not carrying out its activities properly.” He added, “Financial stability and income security are always in balance. “It was included in the plan, but because the financial stabilization camp dismissed (the income replacement rate increase) as a minority plan, two members of the committee members who recommended subscribers resigned, and this was the responsibility of the Financial Accounting Committee,” he said.
Civic groups are also divided, and public opinion is fighting outside the venue… Difficult pension reform
Accordingly, there are concerns that the conflict surrounding the increase토토사이트 in the replacement rate will hinder the future reform process. The question is whether it will be possible to form a social consensus when experts have also failed to reach an agreement. Some also raise the prospect that it could follow in the footsteps of the 2019 Economic, Social and Labor Committee, which failed to reform due to the conflict between the two sides. Nam Chan-seop, a professor at Dong-A University who resigned from the Financial Accounting Committee, raised his voice, saying, “The Financial Accounting Committee’s attempt to brand the theory of strengthening income security as a minority plan denies the need to strengthen retirement security.” On the other hand, Seok Jae-eun, a professor at Hallym University who is in the financial stabilization camp, refuted, “The dichotomous argument that only raising the income replacement rate is a way to strengthen security and that fiscal soundness policies only pursue financial stabilization is a distortion of the facts.”
Civil society groups were also divided into two groups. The National Movement for the Strengthening of Public Pensions, a member of the income security camp, held a denouncing press conference prior to the public hearing and complained, “The core of pension reform is to guarantee retirement income, but the committee proceeded in a biased manner, focusing only on financial stability.” The Pension Union of Future Generations and Working Citizens, a member of the financial stabilization camp, held a separate press conference after the Pension Action press conference and said, “The discussion landscape where (retirement income) security and (financial) sustainability are in conflict is in no way helpful.” I stood.