Pension Reform Committee Takes Initiative... "It Can No Longer Be Delayed"

Joo Ho-young, Special Committee Chair: "Agreement Expected in Next Committee"
Kim Jin-pyo: "Pension Reform Is Not a Political Choice"

The National Assembly began discussions on pension reform as the topic at its first national issue grand debate. Although the National Assembly's Special Committee on Pension Reform, formed six months ago, has yet to produce significant results, Chairman Joo Ho-young of the Pension Special Committee emphasized the fundamental necessity by stating, "Pension reform is the minimum responsibility we must fulfill for future generations and descendants."

At the debate titled "How Should the Pension System Be Reformed?" held at the National Assembly on the 21st, Chairman Joo said, "It is difficult to reach a national consensus, but without taking that path, the collapse of the pension system is inevitable." He added, "Fortunately, the President also has the will to reform the pension system, and the Democratic Party of Korea is currently proactive, so I think the next pension special committee will reach some level of agreement."

However, discussions on National Pension reform within the current National Assembly Pension Special Committee have been going in circles. Although the committee was formed in July last year, six months ago, there have been no significant activities except requesting reform proposals from a private advisory committee. The originally scheduled announcement of the National Pension reform plan in April was reportedly canceled. When the private advisory committee mentioned increasing the contribution rate from 9% to 15%, the ruling and opposition party secretaries reverted the discussion to structural reform rather than contribution increases, returning the debate to square one. The Ministry of Health and Welfare also drew a line by stating, "This is not a government proposal."

Lee Jung-eun, head of the Tax Analysis Office at the National Assembly Budget Office, who gave the first presentation that day, introduced the fiscal projections for various pension reform scenarios. She diagnosed that reforms such as raising the contribution rate and increasing the income replacement rate are necessary to enhance the sustainability of the National Pension. In particular, the scenario of raising the pension contribution rate from the current 9% to 15% showed the highest fiscal stability among five scenarios, extending the fund depletion point by 14 years and predicting a reduction of 3,699 trillion won in cumulative deficits by 2093.

Lee emphasized, "To improve the financial stability of the pension and strengthen income security functions, the cost burden on members of society must increase, and if this recognition is not accepted, pension reform is impossible." She added, "The principle of fairness, which means 'you get what you pay for,' and the spirit of solidarity to maintain community integration must harmonize."

On the same day, National Assembly Speaker Kim Jin-pyo pressured the political sphere by stating, "Reforming the National Pension system is not an option for politicians to do if necessary or not." He said, "Politicians may hesitate to reform pensions due to upcoming elections, but the people are wiser." He continued, "In 2015, we created a national grand compromise body to reform the civil servant pension system. We must do the same this time." He stressed, "We need to create public opinion through a public deliberation committee to successfully achieve pension reform."

From the government side, Lee Ki-il, First Vice Minister of Health and Welfare, stated, "According to the preliminary results of the 5th National Pension financial calculation, the depletion of the National Pension fund is expected in 2055, two years earlier than the 4th financial calculation." He emphasized the importance of system improvement by saying, "There is a broad social consensus that pension reform is an urgent task that can no longer be postponed."