[EDITORIALS]Pension reform can’t wait

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[EDITORIALS]Pension reform can’t wait

The national pension system has a critical flaw. It is based on low premiums and large pension payouts, and if things continue as they have been, the pension fund will start losing money in 2036 and be bankrupt by 2047.
The reason for the problem is the accelerating pace at which Korean society is aging and the low birth rate that makes it impossible to reverse that aging. It is predicted that in 2050, more than 37 percent of Koreans will be elderly, the highest forecast percentage in the world. In 2004, Korea’s birthrate dropped to 1.16 percent. So the number of working people paying pensions is shrinking, and the number of beneficiaries of the pensions is increasing. Financial resources are being stretched thin.
In 2003, experts came up with a plan that called for higher premiums and lower pensions. A bill to that effect was sent to the National Assembly, but nothing has happened. Politicians do not want to handle any matters that might lose them votes. Both the governing and opposition parties have pointed to the pension’s finances with alarm, but have paid no attention to passing the bill.
This year will be the last chance to reform the national pension system. Next year, there will a presidential election and in 2008, National Assembly elections are scheduled. The national pension should not become an issue that will be decided on the basis of which way the political winds are blowing. When the current 1.7 million pensioners increase to 3 million in 2008, reforms will be even harder.
If the government had tackled the national pension issue in 1998, we would not be in this situation today. At the time, the National Assembly made no reforms, and even made things worse. Now we need tens of trillions of won of additional funds. Since 2003, the reform plan has drifted and some trillions of won of additional burden have been added to people’s shoulders every year. The system can only collapse if things continue this way.
President Roh Moo-hyun and the Grand National Party’s chairwoman, Park Geun-hye, both emphasized the importance of national pension reform in their New Year’s speeches. Fortunately, the National Assembly’s Special Committee on the Reform of the National Pension System was reactivated yesterday.
With a firm resolve to come up with a solution to the issue within this year, the administration and the National Assembly have to hammer out an agreement on new measures.
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