Ruling Party Urges Launch of Standing Pension Reform Committee to Create "Pension Lasting 70 Years"

"Let's Promise Structural Reform by Next Year After This Year's Population Reform"
Government Proposal Income Replacement Rate 42%... "Considering Fiscal Stability"

The People Power Party's Special Committee on Pension Reform urged the opposition party to agree on establishing a permanent special committee on pension reform following the announcement of the government's pension reform plan, which involves 'paying more and receiving more.'

Minister of Health and Welfare Cho Kyu-hong is announcing the pension reform promotion plan on the 4th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Jo Yong-jun jun21@

Park Soo-young, chairman of the ruling party's pension reform special committee, held a press conference at the National Assembly on the 4th and said, "As the depletion of the (National Pension) fund becomes more apparent, it is necessary to pass a fundamental reform agreed upon by both ruling and opposition parties during this regular session of the National Assembly and make a public commitment to complete the first phase of structural reform by the next regular session." He added, "To this end, a permanent pension reform special committee must be launched immediately in the National Assembly."

The government’s pension reform plan announced that day centers on raising the contribution rate from the current 9% to 13% and increasing the income replacement rate from 40% to 42%. It also includes measures to improve fund yield rates, introduce automatic adjustment mechanisms, and implement differentiated contribution rate increases by generation.

Park also emphasized the launch of a bipartisan pension reform consultative body involving various related ministries. He stated, "Structural reform is not an issue that can be handled by just one ministry, the Ministry of Health and Welfare, and one committee, the Health and Welfare Committee," and insisted, "At least five or more ministries should be involved in forming the consultative body."

Regarding criticism that the government's plan to raise the income replacement rate to 42% is effectively a step back from the 44% level agreed upon by both parties in the 21st National Assembly, Park responded, "Rather than a retreat, I believe it was an inevitable choice considering fiscal stability," adding, "When set at 44%, the fund depletion point was only extended by nine years. From the party’s standpoint, we believe a pension system that can last about 70 years, not just 9 or 16 years, should be established."

People Power Party lawmaker Ahn Sang-hoon also explained, "Advanced countries that have secured pension sustainability generally aim to create a structure where the fund can operate for 70 years from the present, and many countries have achieved this," adding, "We still have a long way to go, but the government’s proposal can be evaluated as a reasonably rational plan considering various factors."

Regarding concerns that the government's differentiated pace of contribution rate increases by generation to ensure fairness in contribution burdens might cause employment instability among middle-aged and older workers, Ahn said, "There will absolutely be no excessive harm to the middle-aged and older population." He explained that this can be sufficiently prevented through social insurance support programs such as the 'Durunuri' project, which supports low-income groups and those with unstable employment in the labor market.