Gov’t details overhaul for civil servant pensions

The government announced the first draft of its civil servants’ pension reform plan on Thursday in response to criticism over the disparity in benefits between retired bureaucrats and those under the national pension scheme.

The Ministry of Personnel Management announced its reform proposal in a National Assembly meeting. It called to lower the percentage of monthly payouts given to the current batch of civil servants when they retire from 1.9 percent to 1.5 percent of the average monthly income.

This is still higher than the 1.25 percent proposed by the ruling Saenuri Party, which is expected to lead to a backlash because of suggestions it proves the government is backpedalling. The Saenuri proposal also called for higher severance pay to counterbalance the lower monthly pension payout for civil servants.

The government suggests newly hired civil servants should receive a 1 percent payout rate to match the rate applied to retirees who subscribe to the National Pension Service.

The plan also contains a clause calling to halt pension payouts for retired civil servants with high incomes. Currently, former civil servants who reach the top of the income scale still receive 50 percent of the pension payout.

“The proposal can be seen as the government’s basic plan,” said Minister of Personnel Management Lee Geun-myeon, adding that further negotiations will occur to take into consideration proposals by the ruling and opposition parties and the civil servants’ union.

Reforms to the pension system for government workers, widely considered unfair to private-sector workers, have been discussed for year and in several rounds of proposals.

The new government draft for overhauling the civil servant pension program also called to raise the contributions of civil servants, which are currently at 7 percent of a person’s wages, to 10 percent - the same rate that appeared in the Saenuri Party proposal of last year.

For new civil servants, contributions will be 4.5 percent to counterbalance the lower 1 percent payout amounts they will receive when they retire.

Severance pay for government staff will be 39 percent of the annual salary at retirement, the same as the highest level given to private sector workers.

Under the plan, the increases will take place gradually over the course of the next five years.

BY SARAH KIM, LEE KA-YOUNG [sarahkim@joongang.co.kr]