[2023 National Audit] National Pension Service Chairman "Pension Reform Needed... Income Security and Fiscal Stability Together"

Kim Tae-hyun, the chairman of the National Pension Service, said on the 20th, "Pension reform must simultaneously achieve income security, fiscal stability, and intergenerational equity."

Kim Tae-hyun, Chairman of the National Pension Service, is reporting on business operations at the National Assembly Health and Welfare Committee's audit on the 20th. Photo by Kim Hyun-min kimhyun81@

At the National Assembly’s Health and Welfare Committee audit held that day, Chairman Kim responded this way to a question about his opinion on the reform plan proposed by the government-affiliated expert committee, the National Pension Financial Calculation Committee, which suggested "paying more and receiving benefits later."

The Financial Calculation Committee submitted its final report containing 24 scenarios combining contribution rates, benefit commencement age, fund yield, and income replacement rates to the Ministry of Health and Welfare the day before. Although the final report included six scenarios raising the income replacement rate to strengthen coverage, it also presented the goal of "maintaining the reserve fund until 2093," which does not align with the coverage enhancement, leading to evaluations that the focus was effectively on fiscal stability.

Based on the Financial Calculation Committee’s report, the Ministry of Health and Welfare must prepare a comprehensive operation plan and submit it to the National Assembly by the end of this month. Lee Se-ran, director of the Pension Policy Bureau at the Ministry of Health and Welfare who attended the audit, said, "(How many proposals will be submitted to the National Assembly) has not been decided yet," adding, "We will refer to the advisory proposals of the Financial Calculation Committee, but we are not bound by them."

Chairman Kim also emphasized the necessity of pension reform, stating on the same day, "Structural reform and parameter reform need to be discussed together," but warned, "We must avoid a situation where discussions are delayed so much that parameter reform itself cannot be carried out." Parameter reform refers to pension reform that maintains the basic framework of the National Pension system while adjusting detailed indicators such as contribution rates, income replacement rates, and benefit commencement age.

Chairman Kim said he would also work to restore public trust, as many people are concerned that the fund might be depleted and pensions might not be paid. To this end, he said it is necessary for the payment guarantee amendment, which legally ensures that even if the fund is depleted, the state will inject resources to pay pension amounts to subscribers, to be passed. He added, "A pension reform plan must be established that instills confidence in the younger generation that even if they pay money now, they will be able to receive pensions later," emphasizing the restoration of trust among the youth generation.

During the audit, Jeong Chun-sook, a member of the Democratic Party of Korea, pointed out that although the Financial Calculation Committee’s report proposed raising the fund operation yield by 0.5 percentage points and 1 percentage point, the National Pension Service has not even conducted simulations on how much to increase the proportion of risky assets in response to the higher yield target. In response, Chairman Kim said, "We would need to increase the proportion of risky assets by about 20%. We have that kind of idea," but then answered, "There has been no discussion within the Service."