Don't Gamble With PensionsIn a meeting Thursday with stock market personnel, President Kim Dae-jung revealed that the government is planning to raise the percentage of the national pension funds invested in stocks. Officials from the Ministry of Finance and Economy added that in the near future the ministry would increase the portion of the national pension funds invested in the stock market from 10 percent to 20 percent.
It is only natural that the nation's top leader should be interested in the stability of the stock market, and we agree that there is a need to raise the level of institutional investment in our market, which is dominated to an unusual degree by private and foreign investors.
We cannot, however, help being concerned about the fact that money our citizens are depending on for their retirement is to be put to use for such a purpose. The government points to precedents set in advanced nations, but our circumstances are different. In other countries, the individual may choose to establish a private retirement account or may receive retirement pay from a corporate fund, but one of the national pension plans for private citizens, government employees or private school employees, into which virtually all working Koreans are obligated by law to pay, is the only possibility open to most Koreans. To put large quantities of this money in the stock market, in which there is a risk of losing everything, is too much of a gamble. Because of that risk, social security funds in foreign countries are hardly ever invested in stocks.
It makes us uneasy to see the government so ready to use our national pension funds to bolster the stock market. The four major national pension funds are already in trouble, falling short at such a rate that they will run out in 20 to 30 years. Yet the government is willing to put these funds in even greater danger. Who is going to take responsibility when there is no money left to pay retirees?
With the public mood so adversely affected by economic stagnation and the drop in stock prices, an acute need to revive the stock market is being felt in government circles. Nevertheless, we urge the government to think carefully before moving ahead with this investment plan.