[VIEWPOINT]Reform the national pension now

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[VIEWPOINT]Reform the national pension now

After a long hibernation, debates over a proposal for the revision of the national pension system finally began in a standing committee of the National Assembly on Nov. 6.
It came belatedly, but is indeed good news. I truly look forward to the Assembly producing a viable result this time.
The government submitted a draft reform bill of the national pension system in October 2003, but the National Assembly has failed to deliberate on the draft law for the past three years.
There have been a few attempts in the past to establish a central committee to coordinate various opinions expressed in the National Assembly committee. However, the establishment of a special committee itself was foiled due to political battles involving the major parties. I cannot help but suspect that the Assembly truly wants to reform the national pension system.
The governing party has maintained the attitude of a bystander until now, because it has considered the people’s complaints and concerns about reforming the national pension to be a political burden.
In 2004, the opposition Grand National Party also presented a reform bill. It included a basic national pension system, but it seems the party lacked the will to pass the bill through the Assembly or to coordinate differences with the government’s proposed draft revisions. They responded with a rather passive attitude of “accept it if you want, and if you don’t want it, don’t take it.”
On the other hand, are the people also fully aware of the current national pension system? The answer is yes. Many specialists and the media have pointed out the need to change the system. If the system is changed, subscribers will suffer unfairly because they will have to pay more and receive less. However, the people accept the inevitable fact that the current system must be altered.
The government, getting rid of the old practice of hushing up the truth so it doesn’t get criticized by the people, is also expressing the will to actively promote reform. In other words, although the atmosphere for reform is ripe, the National Assembly, the actual decision-making organization, is hesitating to execute the task. Of course, it can also be pointed out that there has been a lack of government inter-departmental effort to induce the participation of the political community in reform.
Because reform has been delayed, the people distrust the government more and more, as much as the debt from the national pension system increases. Starting a long time ago, anti-national pension Web sites became active and movements to abolish the national pension were launched. The fact that the people who did not pay the national pension premium grew by 10 percent, from 4.25 million in 2002 to 4.68 million last year, may be related to people’s lack of confidence in the pension system. The growing lack of confidence by the people in the system is also playing a part in weakening of the foundation of the national pension system itself.
The most urgent and important policy goal of pension reform should be the restoration of people’s trust. The government and the National Assembly must promise the people that from now on, they will not have to worry about the financial problems of the national pension system, anymore, even if they are criticized briefly in the beginning. That is the only way to regain the people’s trust.
They say that the civil servants’ pension system, with its 46-year history, will have a deficit of more than 1 trillion won for the first time next year. If the civil servants’ pension system is not restructured, the deficit will grow like a snowball each year. This is because the government has left the basic low-premium, high-payment structure unattended for so long. If the civil servants’ pension is in such a bad situation, the result of leaving the national pension, which is 20 times bigger than that, without reform will be manifest.
Many people worry about the situation in which we must deal with a suddenly low birth rate and the phenomenon of an aging society. Within 10 years, the number of employed in our country will decrease drastically and the number of senior citizens will rise sharply. We do not have enough time to provide ourselves with a system that can absorb the shock of the arrival of an aging society.
Under such circumstances, the reform of the national pension system is the most essential and urgent task. It cannot be put off any longer. I sincerely hope the National Assembly will make, going beyond political calculation, a decision that will contribute to the long-range welfare for the nation.
The reform of the national pension system should not be made a victim of tactics aiming at popularity or the object of a political bargain.

*The writer is the head of the finance and social development research department of the Korea Development Institute. Translation by the JoongAng Daily staff.

by Moon Hyung-pyo

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