The credit for the national pension reform, one of the government's three major reforms, was passed to the National Assembly at the end of this month without a clear 'number'.
The government's comprehensive national pension operation plan only emphasized the inevitability of increasing insurance premium rates and did not include parameters (numbers) such as specific increase rates, so the ball was passed to the National Assembly.
However, it does not seem easy to push for pension reform that places a burden on the public during a general election period to gain votes.
There is a growing possibility that the 'reform timetable' will be delayed until after next year's general elections.
The government reviewed and approved the 5th National Pension Comprehensive Operation Plan (draft) at the 3rd National Pension Deliberation Committee for 2023 today (27th).
The government's comprehensive operating plan omitted measures to reform parameters such as insurance premium rates and income replacement rates (the ratio of the pension amount to be received compared to the average income during the pension subscription period).
This is why there is criticism that it lacks ‘substance.’
The comprehensive operation plan states, “Compared to member countries of the Organization for Economic Co-operation and Development (OECD), the income replacement rate is similar, but the insurance premium rate is only half, so a gradual increase in the insurance premium rate is inevitable to increase sustainability,” but “the level of the increase will be specified through public discussion.” presented.
Regarding insurance premium rates and income replacement rates, he himself acknowledged their limitations by saying only that he “suggested a direction for reform to start a social discussion.”
There are many evaluations that the plan, which did not include parameter reform measures, was already a set procedure.
The Financial Accounting Committee, an expert committee that draws up a rough outline of national pension reform, submitted a final report containing as many as 24 'scenarios' to the government on the 19th of this month.
Ryu Jae-rin, associate research fellow at the Pension Research Center of the Korea Institute for Health and Social Affairs, said, “According to the Pension Act, the report of the National Pension Financial Calculation Committee must provide figures for establishing the government’s comprehensive operation plan, but it lacked specificity even in 2018 (during the Moon Jae-in administration).” He pointed out, “No specific details have been released so far.”
Kim Won-seop, president of the Korean Pension Society, also said, “The numbers have never been properly presented in the report of the Financial Accounts Committee,” and “it will be a burden for the government to finalize the plan.”
He added, “The Financial Accounts Committee and the government are discussing it in the National Assembly, but they may have thought that putting out (numbers) would make it more complicated and difficult.”
The comprehensive operation plan reviewed on this day will be submitted to the National Assembly by the end of this month after approval by the State Council and the President.
Accordingly, the National Assembly will discuss pension reform plans centered around the Pension Reform Special Committee.
The National Assembly's Special Committee on Pension Reform, which was originally scheduled to end at the end of this month, has failed to produce any tangible results and has postponed its activity deadline to May next year.
Previously, in April, the National Assembly extended the deadline for the Pension Reform Special Committee's activities by six months from the end of April to the end of this month.
While major issues of pension reform, such as insurance premium rates and income replacement rates, have not been resolved, the ruling and opposition parties have no choice but to continue preparing for the general election on April 10 next year.
Although there are several months left on the timetable, the outlook does not look very bright.
There are observations that neither the ruling party nor the opposition party wants to strongly push for a national pension reform plan that will inevitably place a burden on the public ahead of the general election, where each vote is precious.
Moreover, if the political situation fluctuates depending on the results of the general election, reaching an agreement is bound to face greater difficulties.
Seok Jae-eun, a professor of social welfare at Hallym University, said, “The timing of reform is more important than anything else,” and emphasized, “Everyone agrees on increasing insurance premiums, so we must raise it quickly and begin structural reform such as the basic pension.”