Jinseongjun "Accepting National Pension Income Replacement Rate Below 43%"... Positive Signal for Rapid Pension Reform Progress (Comprehensive)

"If the Ruling Party Accepts Formalization of State Guarantee, We Will Ultimately Accept"
"Legislative Reform of Parameters Must Be Completed in the National Assembly's Health and Welfare Committee"
"Democratic Party Leader Lee Jaemyung's Directive... A Magnanimous Concession"

The Democratic Party of Korea announced on the 14th that it will "accept the National Pension income replacement rate reform plan of 43% advocated by the People Power Party and the government."

Jin Seong-jun, the policy chief of the Democratic Party, said at an on-site Supreme Council meeting held in front of Gwanghwamun, Jongno-gu, Seoul, that morning, "The Democratic Party, under the direction of party leader Lee Jae-myung, has decided to make a magnanimous concession once again solely for the people through the discussion process of the Supreme Council."

He added, "While reforming the National Pension is inevitable, it is also true that the burden on the people will increase. The political circles will fulfill at least their minimum duty for the people who must bear the increasing burden."

He stated, "Pension reform is urgent to ensure the sustainability of the National Pension that guarantees retirement income. If the People Power Party ultimately accepts three issues?the formalization of state payment guarantees, the expansion of childbirth and military service credits, and the expansion of insurance premium support for low-income groups?the Democratic Party will accept the 43% income replacement rate."

On the 14th, the Democratic Party's on-site Supreme Council meeting is being held near Gwanghwamun, Seoul. Photo by Yonhap News

The condition proposed by the Democratic Party for formalizing the state payment guarantee is to specify in the National Pension Act that the state will pay the promised pension under any circumstances. The childbirth and military service credits mainly involve applying childbirth credits, which currently apply from the second child, to the first child as well, and expanding military service credits to cover the entire service period.

Jin said, "I hope the National Assembly's Health and Welfare Committee will promptly complete the legislative reform of the parameters with the above content and that the National Assembly will form a special committee on National Pension reform to swiftly begin discussions on the second phase of structural reform."

However, the Democratic Party stated that it will not accept the automatic adjustment mechanism proposed by the government. Jin emphasized, "The automatic adjustment mechanism is part of structural reform rather than parameter reform. The detailed design and timing can lead to significantly different outcomes. Under the current circumstances, even if it is under the National Assembly's approval authority, I clearly state that it is difficult to accept the automatic financial adjustment mechanism."

Previously, the People Power Party and the Democratic Party showed a clear difference in position regarding the income replacement rate, which is the ratio of pension benefits to income, with the People Power Party advocating 43% and the Democratic Party 44%. On the 6th of this month, during the ruling and opposition parties' national policy consultation, the Democratic Party said it would review the government's and ruling party's proposal of "National Pension insurance premium rate 13% and income replacement rate 43%" but ultimately conveyed a position of non-acceptance. However, with the decision to conditionally accept the "National Pension income replacement rate of 43%" advocated by the government and ruling party on this day, attention is focused on whether the stalled ruling and opposition national policy consultation will resume.