[Gwanga in] Only the Process Was 'Heated' in the Pension Reform Plan... Two Ministries Were Tense Over 'Payment Guarantee'

Ministry of Strategy and Finance vs. Ministry of Health and Welfare Legislative Battle

The pension reform government plan announced by the Ministry of Health and Welfare last month has been criticized as 'ineffective,' but there was intense debate within the government until just before the final plan was drawn up. In particular, during the final stages of discussion, there were reportedly heated exchanges between the Ministry of Strategy and Finance and the Ministry of Health and Welfare over the inclusion of a government guarantee clause for the National Pension.

According to related ministries on the 14th, the Ministry of Strategy and Finance and the Ministry of Health and Welfare engaged in a tug-of-war until the last moment over the inclusion of a 'legal guarantee for National Pension payments' in the process of creating the National Pension reform plan. The current National Pension Act already contains a clause stating that 'the state shall establish and implement necessary policies to ensure that pension benefits are paid stably and continuously.' However, there has been a demand to explicitly codify the guarantee at a clearer level to enhance trust in pension finances.

[Image source=Yonhap News]

The Ministry of Health and Welfare insisted that a provision mandating the guarantee of National Pension payments should be included in the pension reform plan. Considering the considerable distrust among the younger generation regarding pension finances, they argued that measures should be taken to alleviate their anxiety even slightly. However, the Ministry of Strategy and Finance expressed opposition. They argued that if the government commits to fiscal support without including a concrete roadmap for securing pension financial stability?such as how much and how to raise insurance premiums?future fiscal instability could become excessively large.

An official from the Ministry of Strategy and Finance said, “Since explicitly guaranteeing payments would have a significant impact on national finances, we expressed our position after considering the ministry’s views. We examined whether it is appropriate to explicitly include a guarantee clause when the state is not the user of the National Pension.” He also explained, “As the fiscal authority, we had to consider the impact on future national debt if measures to stabilize finances, such as raising National Pension insurance premiums, are not preconditioned.”

Ultimately, the comprehensive National Pension reform plan was finalized in a way that reflected both the Ministry of Health and Welfare’s determination and the Ministry of Strategy and Finance’s concerns. Following the Ministry of Health and Welfare’s position, the plan first included the statement that ‘to enhance the trust of the younger generation, the basis for the state’s payment guarantee will be more clearly defined.’ Then, in response to the Ministry of Strategy and Finance’s concerns, an additional sentence was added: ‘However, to prevent misunderstandings that the current system can be maintained solely by codifying the payment guarantee, legal amendments will be pursued simultaneously with pension reforms that enhance sustainability.’ The traces of the intense debate between the two ministries are embedded in every phrase of the wording.