Yoo Kyung-jun: "The 국민연금 'Pay More, Receive More' Plan Is a Deterioration"... Dark Clouds Over National Assembly Pension Reform Talks

Criticism of Deliberation Committee Discussion Results Expressed via SNS

Yoo Kyung-joon, the People Power Party (PPP) lawmaker serving as the secretary of the National Assembly's Special Committee on Pension Reform, expressed on the 23rd that the pension reform plan discussed by the Deliberation Committee is a "deterioration." He argued that the plan did not consider intergenerational equity issues and also posed problems in terms of sustainability. With Yoo, a key figure in the National Assembly's pension reform discussions, opposing the plan, the possibility of processing it within the 21st National Assembly has become remote.

On the same day, Yoo criticized the pension reform plan discussed by the Deliberation Committee through social media (SNS), saying, "The primary reform option, which proposes a 13% contribution rate and a 50% income replacement rate, is not an improvement over the existing 9% contribution rate and 40% income replacement rate but rather a deterioration."

Earlier, the Deliberation Committee under the special committee announced the results of a public opinion survey conducted in the form of a questionnaire based on judgments made by a 492-member citizen deliberation panel after learning and discussing pensions. As a result of the learning and discussions, 56.0% of the citizen deliberation panel agreed with the income guarantee plan, called the "pay more, get more" option, which raises the contribution rate to 13% and the income replacement rate to 50%. Meanwhile, 42.6% supported the so-called "pay more, get the same" financial stability plan, which increases the contribution rate to 12% while maintaining the income replacement rate at 40%.

Yoo Kyung-joon, member of the People Power Party. Photo by Kim Hyun-min kimhyun81@

Regarding this, Yoo stated, "From the perspective of balance, a 1 percentage point increase in the contribution rate roughly covers about a 2 percentage point increase in the income replacement rate," adding, "If the contribution rate is raised by 4 percentage points as in Option 1 (referring to the income guarantee plan), the income replacement rate should be about 48% to barely overlook the current fund issues, but since the income replacement rate is raised by 2 percentage points more than that, it is clearly a deterioration in terms of a sustainable pension system." He continued, "The official name of Option 1 is 'pay a little more than before and get more than that,' and it is accurate to call it a deterioration plan."

He explained the reason why the income guarantee argument prevailed, saying, "Looking at the public deliberation process, it seems that even young people, who will be the main beneficiaries after paying contributions at a 13% rate and receiving a 50% income replacement rate for 40 years, leaned toward approval because they are told they will receive more benefits than the previous generations who got what seemed like free benefits (9% contribution rate and 40% income replacement rate)."

He also pointed out the lack of consideration for intergenerational equity. He said, "Basically, structural reform should precede, and the contribution rate and income replacement rate should be determined accordingly. It is regrettable that the diverse and complex contents of pension structural reform were not well organized and brought to discussion," adding, "Especially, the theme of enhancing intergenerational equity is the most important aspect of pension reform to prevent fund depletion and transition to a sustainable National Pension."

Yoo also stated, "At the very least, there should have been serious discussions on a method that guarantees future generations receive benefits proportional to their contributions, unlike the current National Pension system, which has sustainability issues due to paying too little and receiving too much."