"Reform Delay of 1 Year Increases Insurance Premium Rate Burden by 0.5%"
Kim Sang-gyun, chairman of the Pension Reform Deliberation Committee (Deliberation Committee), emphasized that pension reform agreement must be reached before the end of the 21st National Assembly’s term, regarding the failure of ruling and opposition parties to negotiate adjustments to the National Pension’s insurance premiums and benefit payments. The term of the 21st National Assembly ends on the 29th.
On the 9th, Chairman Kim stated on CBS Radio’s "Kim Hyun-jung’s News Show," "It is still too early to definitively say the negotiations have failed," and added, "There is still plenty of time left, so there remains room for a settlement." Regarding Joo Ho-young, chairman of the National Assembly Pension Reform Committee, announcing on the 7th that the committee’s activities in the 21st National Assembly have effectively ended, Kim said, "I see it as an interim report indicating difficulties in negotiations," and added, "Declaring the end of negotiations requires agreement between the ruling and opposition parties, but there have been no signs of such consensus."
He also argued that the current deadlock between the ruling and opposition parties is "a phenomenon commonly seen in the final stages of negotiations." Chairman Kim said, "Until the moment of agreement, each side inevitably clings to its own cards," but "once an agreement is reached, the previous process remains only as a single process." He further noted, "The important fact is that the agreement on a 13% insurance premium rate is a remarkable achievement in the history of pensions," and predicted, "If an income replacement rate between 43% and 45% is settled, it will become the second milestone."
Previously, the Deliberation Committee proposed two options for pension reform. Option 1, known as "pay more, receive more," involves raising the insurance premium rate from the current 9% to 13% and increasing the income replacement rate from 40% to 50%. Option 2, called "pay more, receive the same," raises the insurance premium rate to 12% while maintaining the income replacement rate at 40%.
The ruling and opposition parties agreed on raising the insurance premium rate to 13%, but failed to narrow their differences on the income replacement rate. The People Power Party argues that the income replacement rate can only be raised up to 43% to ensure pension financial stability, whereas the Democratic Party believes it should be at least 45% to guarantee retirement income security.
Chairman Kim emphasized, "Pension reform is not a one-time event but must be carried out gradually and semi-permanently in line with public expectations." He stressed the need for swift agreement on pension reform, saying, "For every year the reform is delayed, an additional 0.5 percentage points (p) of insurance premium burden must be borne."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
