Suspension of Basic Pension Couple Reduction Abolition... Ministry of Health and Welfare Says "Must Discuss Together with National Pension"

Expansion of the National Pension Credit System Gains 'Sympathy'

[Image source=Yonhap News]

[Asia Economy Reporter Naju-seok] The Democratic Party of Korea is advocating for the abolition of the basic pension couple reduction, but the government has stated that the basic pension system should be discussed together within the framework of national pension reform. The issue of raising the basic pension by 400,000 won, which President Yoon Seok-yeol pledged during the presidential election, should also be discussed within the pension reform framework.

At the special committee meeting on pension reform held at the National Assembly on the 6th, Go Young-in, a Democratic Party lawmaker, said, "Regarding the basic pension, both President Yoon and the Democratic Party agreed to raise it from the current level of 300,000 won to 400,000 won," adding, "A political agreement on the basic pension should be implemented." Since both ruling and opposition parties share the same political will, they suggested implementing it first without being constrained by the pension reform discussion framework.

In response, Cho Kyu-hong, Minister of Health and Welfare, said, "The issue of raising the basic pension from 300,000 won to 400,000 won should be implemented in connection with the pension system in the National Assembly," adding, "If it increases by 100,000 won, the income replacement rate rises by 2 percentage points. Since insurance premiums and income replacement rates are the main topics in national pension reform, it is desirable to discuss them in connection."

There was also a claim that the issue of abolishing the basic pension couple reduction, which the Democratic Party is promoting, should be discussed in the basic pension special committee.

Lawmaker Kim Mi-ae asked about the financial requirements if the basic pension couple reduction is abolished and if 100% of the basic pension is paid to all elderly aged 65 and over. Minister Cho responded, "If the couple reduction is abolished, it will cost 2.1 trillion won next year, of which 1.6 trillion won is national funding." Then, Lawmaker Kim said, "According to my understanding, paying 400,000 won to 100% of all elderly would cost 23 trillion won." She added, "The cost will increase every year," and said, "Since tens of trillions of won are required, social consensus formation will be an obstacle separate from pension reform, so it should be discussed together with pension reform."

There was also discussion about the need to supplement the credit system. Currently, certain periods such as military service and childbirth are recognized as part of the national pension subscription period, and it was suggested that this should be linked to national finances. Democratic Party lawmaker Lee Yong-woo pointed out, "According to an OECD report, there is a recommendation to expand unemployment and childbirth credits," adding, "I believe credits should be linked to national finances from a social policy perspective." Minister Cho responded, "The current credit system alone cannot cover blind spots, so I will actively participate in discussions."

Justice Party lawmaker Kang Eun-mi also mentioned the role of financial authorities regarding the credit system, to which Minister Cho replied, "It is appropriate to support it from the general account of national finances," adding, "We can resolve pension blind spots through consultation with financial authorities."