&#91EDITORIALS&#93Pension reform is necessary

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[EDITORIALS]Pension reform is necessary

The reaction of both labor and business against a government-proposed revision of the National Pension Act is growing stronger. The gist of the revision is to lower, from 2008, the premium rate from 60 percent to 50 percent of the average income of a standard policy-holder who has been covered for 40 years. The insurance fee, currently 9 percent of income, will be raised by 1.38 percent annually from 2010, reaching 15.9 percent in 2030. In short, it means paying more and getting fewer benefits. Labor is dissatisfied because it will get less, and management is upset because insurance costs, half of which are paid by the employers, will increase.
It may be natural for interest groups to raise objections. For the future of the nation, however, revision of the pension system is urgent and inevitable. If we leave it as it is, the fund will be drained in 2047. The result would be transferring the financial burden to future generations, while the present generation avoids the disadvantages. If we fail to amend the system, we will unavoidably be criticized as “irresponsible predecessors.”
Although policyholders are not happy, the government proposal is a realistic one. And the government must make a desperate effort to boost the credibility of its policy. Salaried workers should not be made easy prey. More than half of regional policyholders underreport their income and pay fees in proportion to that amount. An inter-governmental effort to collect data on the income of the self-employed ― such information is collected on only 34 percent so far ― is urgent.
At the same time, the balance with other pension systems must be considered. This year, the insurance payments to civil servants, military officers and private school teachers have increased by 14 percent. If the payments of other pensions increase, while those of the national pension system are reduced to below the level of a minimum livelihood, who would trust government policy? Moreover, the pension funds for civil servants and military officers are in chronic deficit and get a government subsidy. The government must exert various efforts to boost the credibilty of its policy.
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