Ruling and Opposition Parties Reach Tentative Agreement on Raising Income Replacement Rate to 43%
Differences Remain Over Details of Special Committee Operation
Although the ruling and opposition parties have reached a historic agreement on the fundamental reform of the National Pension, they still show differences over the operation method of the Special Committee on Pension Reform, which will discuss structural reform. Attention is focused on whether a consensus can be reached through additional negotiations between the ruling and opposition parties during this delicate period ahead of President Yoon Seok-yeol's impeachment.
According to political circles on the 17th, the ruling and opposition parties have agreed in principle to raise the current insurance premium rate from 9% to 13%, increase the income replacement rate from 40% to 43%, and strengthen support for low-income groups. However, they show differences over the operation method of the pension special committee that will discuss structural reform in the future, preventing the negotiations from reaching the final stage.
Kwon Seong-dong, Emergency Response Committee Chairman of the People Power Party, and Kwon Seong-dong, Floor Leader, are attending the Emergency Response Committee meeting held at the National Assembly on the 17th. 2025.3.17 Photo by Kim Hyun-min
In this regard, Kwon Seong-dong, the floor leader of the People Power Party, criticized at the emergency committee meeting on the same day, saying, "Having taken the first step of agreeing on the fundamental reform, we must now take the second step of forming the pension special committee and structural reform," and added, "The Democratic Party is delaying discussions by rejecting even the minimum principle of 'consensus processing' in forming the pension reform special committee." On the other hand, the Democratic Party raised doubts about the necessity of insisting on the 'consensus processing' schedule, given that the chairperson of the special committee has already been assigned to the ruling party. Jin Seong-jun, the policy chief of the Democratic Party, argued in a KBS radio interview that "Since the chairperson of the special committee is already held by the People Power Party and the committee is to be operated with equal numbers from both parties, demanding 'consensus processing' seems like an unnecessary pretext to obstruct reform."
The sensitive reactions from both parties over the procedural method of the special committee, despite the hard-won agreement on the fundamental reform, stem from the difficulty and political explosiveness of the structural reform to be discussed in the committee. The government and the ruling party hold the position that an automatic adjustment mechanism, which adjusts pension benefits according to population and economic conditions, should be introduced. Regarding this, the Democratic Party considered introducing the automatic adjustment mechanism with parliamentary approval but retreated, saying it was "difficult to accept." Additionally, many issues to be addressed in structural reform, such as the relationship between the basic pension and the National Pension, are highly volatile matters.
However, there is a consensus within both parties that the already agreed-upon schedule for the fundamental reform should be expedited. Voices calling for urgency are growing, considering the early presidential election schedule. Park Ju-min, a Democratic Party lawmaker and chair of the National Assembly's Health and Welfare Committee, said in a BBS radio interview on the same day, "It is appropriate to handle it within this week."
Jin Seong-jun, the Policy Committee Chairman of the Democratic Party of Korea (left), is attending an emergency party members' meeting held at the National Assembly in Yeouido, Seoul on the 14th. Photo by Yonhap News
Initially, some expected that an agreement might be reached as the Welfare Committee's full meeting was scheduled for the 18th, but it is known that the schedule was not discussed at all. Kang Seon-woo, the Democratic Party's secretary of the Welfare Committee, told Asia Economy on the morning of the same day, "No meeting schedule related to pension reform has been set." Accordingly, negotiations are expected to take place between the leadership of the Democratic Party and the People Power Party rather than between the secretaries of the Health and Welfare Committee. A People Power Party official explained, "There will be contacts this week at the working level, such as with the policy chief."
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