&#91EDITORIALS&#93Prolonging pension crisis

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[EDITORIALS]Prolonging pension crisis

The government and the Millennium Democratic Party decided to adjust the pension benefit of the National Pension to 55 percent of average income for the contribution period, starting next year. This goes against the restructuring proposal of the pension system. Under the current system, the rate of pension benefits is too high and the pension payments are too low ― corporate employees pay 9 percent of their income and regional members pay 7 percent. As a result, the National Pension Fund would be drained by the year 2047.
Because of this, the Ministry of Health and Welfare established a committee to study ways to develop the National Pension System. The committee recently presented a reform proposal after collecting opinions of experts in various fields. It recommends that pension benefits be lowered from the current 60 percent of average income to 50 percent and the pension contribution be increased from 2010 to gradually come up to 15.85 percent by 2030. In other words, it is a proposal to pay more and receive less, so that the draining of the pension fund can be prolonged till 2070.
The decision to lower the pension benefits to 55 percent from next year and to 50 percent from 2010 will cause the fund to dry out earlier. The proposal is relatively beneficial to current pension subscribers. It is natural, therefore, that the decision is criticized as a pork-barrel proposal aiming at the National Assembly election next year.
It is not the first time pension reform attempts were foiled by politics. In 1997, a reform task force of the National Pension System proposed lowering pension benefits from 70 percent to 40 percent. Later, the Ministry of Health and Welfare adjusted it to 55 percent. But, in 1998, the National Assembly passed a bill, increasing the rate to 60 percent ― a change for the worse.
If politicians obstruct reform out of fear of getting angry reactions from pensioners, it will be unavoidable that the system will be again targeted for reform in the near future. Politicians and the government must reform the system without favoritism so that the fund can overcome this crisis.
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