[The Editors' Verdict] Pension Reform: Should the President Ultimately Take the Lead?

"Pension reform requires the president to take the lead in reaching a social consensus." (Democratic Party lawmaker A)

A few days ago, opposition party economic expert lawmaker A said that reforms to public pensions, including the National Pension Service, and National Health Insurance can no longer be postponed. He emphasized, "Pension reform is such a complex and difficult issue with many vested interests that it is impossible without the president stepping in." This implies that the pension reform process will be arduous.

Most people are aware that public pension and health insurance reserves will soon be depleted due to the rapid progression of low birth rates and aging population. Because of this, some people worry, saying things like, "Won't we be unable to receive the National Pension later?" or "If the health insurance reserves run out, won't the benefits be drastically reduced?" Many also predict that delaying reform will significantly increase the burden on younger generations compared to now.

The Korea Development Institute (KDI) recently projected that the National Pension will run a deficit starting in 2036 and be completely depleted by 2054. The combined balance of the four major social security funds, including the National Pension, is expected to turn negative by 2038. Some argue, "If the National Pension or health insurance funds run out, can't the government cover it with taxes?" However, the national fiscal situation is also challenging. The national debt ratio was 43.9% in 2020 but is expected to rise to 144.8% by 2060. In the worst-case scenario, such as further declines in birth rates or failure to control discretionary spending, it could reach about 231%, making even bond issuance difficult.

Regarding the Government Employees Pension, although reforms were pursued during the Park Geun-hye administration, the increase of 130,000 government employees under the Moon Jae-in administration has prevented the reforms from being effective. The health insurance deficit is also accumulating. The Ministry of Health and Welfare estimates that next year's health insurance deficit will reach 1.4 trillion won. The deficit is expected to grow from 2.6 trillion won in 2024 to 8.9 trillion won in 2028. This year, the health insurance reserves stand at 21.2 trillion won, but with the accumulating deficits, the reserves are expected to be depleted by 2028.

The political sphere is not just standing by. The National Assembly's Special Committee on Pension Reform completed the formation of a private advisory committee on the 16th of last month and began discussions on restructuring public pensions. The committee plans to prepare multiple reform proposals, conduct public discussions, and finalize a single plan by April next year.

However, concerns are already being raised inside and outside the National Assembly. While the ruling party and government emphasize fiscal soundness, the opposition places relatively more importance on income security. To create a single plan, public opinion must be gathered to form a social consensus, but it is difficult to satisfy all pension subscribers. It may be practically impossible to devise a plan that is sustainable while sufficiently guaranteeing retirement income. Moreover, with the economy worsening significantly and the 2024 general election approaching, there are criticisms that both ruling and opposition parties will only delay the process. It is said that while both sides engage in pension reform, they are busy calculating political gains and losses behind the scenes.

The ruling and opposition parties also experienced severe conflicts while reviewing next year's budget. Pension reform will inevitably involve even greater struggles. Nevertheless, since it is a matter that determines the nation's future, pension reform must be carried out with utmost sincerity?even if the president does not take the lead.