Is the government committed to pension reform?

The Ministry of Health and Welfare confirmed the fifth comprehensive plan for pension management on Friday during the meeting of the Health and Welfare Committee at the National Assembly. The key to pension reform is to decide how much to pay, at what age, and how much to receive, but the plan is missing all of these numbers. The responsibility for pension reform has now been shifted to the National Assembly, with the rationale that a public discussion process is essential due to differing opinions across generations. The former Moon Jae-in administration had presented a plan with four scenarios, which was heavily criticized as 'utterly irresponsible.'

Pension reform has already lost momentum after the government's advisory body, the National Pension Financial Calculation Committee, failed to produce a single plan. Despite claiming that a 'pay more, take less' reform is essential for the sustainability of the pension system, the Committee concluded its work by presenting the government with more than 20 reform scenarios.

A responsible government would have chosen the best of these options to convince the public and speed up the reform process. Instead of narrowing down the choices, the government has reset the pension reform debate to square one with a blank slate. While claiming that reaching a premium rate comparable to that of advanced countries, which is currently half, is inevitable, it offers only a broad direction for pursuing a gradual increase in the pension premium rate.

The current pension system, which requires people to contribute 9% of their income and receive 40% in retirement, has been labeled by international evaluation agencies as 'difficult to guarantee the system's effectiveness and sustainability.' As the number of pension contributors plummets and the number of recipients soars, the pension fund is projected to run a deficit from 2041 and be depleted by 2055. Beyond that point, it will transition to a full pay-as-you-go system, and by 2060, if a working person earns 1 million won, they will have to pay 340,000 won for pensions. Even this projection is based on an optimistic forecast of a 1 percent fertility rate. According to a report released by the National Pension Research Institute, the unfunded accrued liability that future generations will have to bear for the current generation to receive their pensions is 173.5 trillion won, resulting in a debt of 80 million won per member. Less than 30% of Koreans in their 20s and 30s believe they will receive a pension income later. I wonder how long this system will last.

The government will submit a final plan to the National Assembly by Tuesday, following deliberation by the State Council and approval by the president. If the president approves it, we must ask: Why did he sign the bland bill after making pension reform one of his top three priorities upon taking office and repeatedly emphasizing, “Although it's unpopular, it has to be done”? The president should convince us before signing the plan and handing it over to the National Assembly why he is irresponsibly squandering this golden opportunity for reform.