"Labor Groups and Civil Society Oppose Automatic Adjustment Mechanism"
"Parametric Reform Must Be Legislated Within the February Extraordinary Session"
The Democratic Party of Korea announced that it aims to pass the parametric reform bill related to the National Pension during this month's parliamentary session. Regarding the automatic adjustment mechanism that adjusts pension contribution rates and benefit amounts, the party shifted from a conditional acceptance stance, stating, "Since this is an issue where interests are sharply conflicting, the Democratic Party must consider it carefully."
Jin Seong-jun, the Democratic Party's Policy Committee Chair, held a press briefing at the National Assembly on the afternoon of the 24th and said, "The Democratic Party's position is that parametric reform must be legislated within the February extraordinary session," adding, "The remaining schedule will be decided by the National Assembly's Welfare Committee in consultation with the party leadership."
The ruling and opposition parties have agreed on raising the contribution rate (the amount paid) from the current 9% to 13%, which is the core of the pension reform's parametric reform, but they differ on the income replacement rate (the amount received). Chair Jin explained, "The People Power Party's party line is to set the income replacement rate at 42%, and the government is willing to accept up to 43%. The Democratic Party's party line is 45%. Representative Lee Jae-myung proposed reducing it by 1% to try 44%."
Chair Jin stated that reports suggesting the Democratic Party accepted the National Pension automatic adjustment mechanism are not true. He explained, "Labor groups and civil society, who are direct stakeholders in pension matters, have conveyed to the party their strong opposition, urging caution regarding the introduction of the automatic adjustment mechanism," and added, "After gathering opinions, the leadership concluded that although it is a conditional mechanism, this issue requires careful discussion."
Jinseongjun, Chairman of the Policy Committee of the Democratic Party of Korea, is holding a policy issue press briefing at the National Assembly on the 6th. 2025.2.6. Photo by Kim Hyunmin
The automatic adjustment mechanism is a system that automatically adjusts pension contribution rates and benefit amounts based on factors such as the number of subscribers, inflation rate, and subscribers' life expectancy (pension expenditure). It was included in the pension reform plan announced by the Yoon Seok-yeol administration in September last year. It is a mechanism to flexibly adjust the pension scale for sustainable operation of the National Pension. Labor groups oppose this mechanism, arguing that it effectively reduces pension benefits, making it difficult for the Democratic Party to accept.
Chair Jin said, "At present, I can say that the positions of the two parties regarding National Pension reform are parallel," and explained, "There is about ten years ahead, and pension plans are designed to operate the pension system every five years. Meanwhile, structural reforms and government treasury support can be discussed, so I do not think the automatic stabilization mechanism necessarily has to be activated or operated."
He added, "Since interests are sharply conflicting, it is not a matter to conclude immediately but requires more time for discussion," and said, "After handling the parametric reform, a special parliamentary committee on pensions will be formed to discuss structural reforms, so it can be discussed together then."
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