Policy Research Service Results... "Resolving the Mismatch in Civil Servant Pension Benefit Timing"
[Asia Economy Reporter Park Cheol-eung] The National Assembly Legislative Research Office has raised the necessity of extending the retirement age for public officials. It pointed out that a gap arises due to the mismatch with the timing of public officials' pension benefits, and that major foreign countries such as the United States and the United Kingdom have also extended or abolished the retirement age.
The Legislative Research Office recently released a report titled "Discussion on Extending the Retirement Age for Public Officials and Future Improvement Measures," authored by Professor Shim Dong-cheol of Korea University, a member of the Korean Society of Personnel Administration. This report was commissioned to Professor Shim in April as part of a policy research project. The Legislative Research Office stated, "With the reform of the public officials' pension system extending the pension benefit age from 60 to 65, a gap in income after retirement has occurred," and identified the extension of the retirement age for public officials as one of the major issues in the 21st National Assembly as of May.
In the report, Professor Shim pointed out, "The government must actively work to resolve the mismatch between the pension benefit age and the retirement age of public officials as soon as possible. Since only the pension benefit age was raised, public officials who retired in 2022 are unable to receive their pension immediately after retirement."
He added, "Many countries experiencing a super-aged society have long been reforming their public officials' pension systems while continuously making efforts to extend the retirement age for public officials."
In the case of the United States and the United Kingdom, the upper age limit for workers has already been abolished and applies to public officials as well. Japan began serious discussions in 2004, and as of last March, a bill to gradually extend the retirement age for national public officials from 60 to 65 has been submitted. Professor Shim emphasized, "It is particularly noteworthy that Japan significantly reduced resistance to reforming the public officials' retirement system by allowing sufficient time for discussion and persuading companies and the public before legislation."
Professor Shim suggested, "It is necessary to first consider extending work through re-contracting. The form of contract extension for public officials, as implemented in Japan, can be referenced, and it may also be possible to utilize Germany's part-time work system or flexible work system."
He also viewed it as desirable to prioritize general public officials first and then expand to specific public officials later, considering the financial burden. Professor Shim proposed applying a wage peak system, adding, "However, careful design of the wage peak system is necessary as it may induce retirement more than extending the retirement age."
He further stated, "For the effective establishment of extending the retirement age for public officials, a performance-oriented culture must be established within the public official organization, and flexible personnel management should be possible," noting, "In the current seniority-based public official organization, it may be difficult to prepare performance evaluation criteria to extend the retirement age."
Assuming that the retirement age for all public officials is extended by five years starting from 2022, when the mismatch between the pension benefit timing and retirement age occurs, the number of those subject to extension is expected to be 17,411 in 2022 and 208,350 in 2031. The additional budget required is estimated to reach 1.0919 trillion KRW in 2022 and 16.6462 trillion KRW in 2031.
The current retirement age for public officials is 60 for general positions, the same for police and fire officials though with rank-based retirement ages, and 62 for education officials.
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