Pension Reform Discussions Moved to the National Assembly... Government Support Begins

Ministry of Health and Welfare to Launch 'National Pension Future Reform Advisory Group' in January
Composed of Experts Participating in the National Assembly Pension Special Committee's Private Advisory Committee and the 5th Financial Estimation Committee

The National Assembly's Special Committee on Pension Reform (Pension Special Committee) has decided to establish a Deliberation Committee within this month to derive a reform plan for the National Pension, and the government plans to launch an advisory group to support this in January next year.

On the 18th, the Ministry of Health and Welfare announced that it has begun preparations to launch the 'National Pension Future Reform Advisory Group' in January next year. The advisory group will consist of about 10 experts as a follow-up measure to the 5th Comprehensive Operation Plan for the National Pension announced last October. The advisory group will include macroeconomic, institutional, and fiscal experts who have experience participating in the National Assembly Pension Special Committee's private advisory committee and the 5th Financial Projection Committee.

[Image source=Yonhap News]

The advisory group plans to support the discussions of the Deliberation Committee. Since the responsibility for pension reform has shifted to the National Assembly, the group will provide basic data necessary for deliberation, help identify issues to be discussed, and assist in highlighting key points. A Ministry of Health and Welfare official explained, "The government presented tasks to be socially discussed while releasing the comprehensive operation plan, and the advisory group will play a role in highlighting these issues."

The National Assembly is reportedly working on launching the Deliberation Committee within this month. The process involves deriving specific agendas through a panel of experts and then having a citizen representative group participate to discuss the derived agendas. The Deliberation Committee will discuss not only parametric reforms involving adjustments to the insurance premium rate and income replacement rate, which are the public's top concerns, but also structural reform plans. The agenda is expected to include redefining the functions between the Basic Pension and the National Pension, as well as fund management of retirement pensions.

The Special Committee plans to present a pension reform plan before next year's general election. However, the schedule is tight, considering the time needed for agenda collection and participant education. Realistically, it is expected to take considerable time to narrow down the agendas to be discussed by the Deliberation Committee. While the government and ruling party insist on discussing reform plans including overall structural reforms, the opposition party argues that parametric reforms should be prioritized first.

Even if the focus is narrowed down to parametric reforms alone, deciding on the extent of increases in the income replacement rate and insurance premium rate has not easily reached consensus among experts, making it difficult to conclude discussions before the general election. However, a source who participated in the National Assembly Pension Special Committee's private advisory committee said, "At least a plan should be formulated before the general election. Of course, it will be difficult to create a reform plan executable through legal amendments, but at least two or so concrete plans suitable for public deliberation should be produced."

Meanwhile, on the 14th, the Ministry of Health and Welfare announced that it will also operate a 'Financial Projection Working Group' composed of the National Pension Research Institute and others to reflect the 2023 Future Population Projections announced by Statistics Korea in the long-term financial outlook of the National Pension. The Ministry expects to obtain more accurate financial projection results by incorporating the latest information such as life expectancy, fund size, and macroeconomic factors. Jung Yoon-soon, Director of Social Welfare Policy at the Ministry of Health and Welfare, stated, "Through the advisory group and the projection working group, we will concretize social discussion tasks by issue, provide financial projection data, and support the active progress of the National Assembly's public deliberation process."