[Outlook]Unfair burden

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[Outlook]Unfair burden

Next year, more than 2 trillion won ($2.1 billion) of taxpayers’ money will be used to cover funding deficits in the pension programs for civil servants and soldiers. Next year, the size of the national budget is expected to increase the most since the Roh administration took office, and taxes are also expected to increase.
If taxes need to be increased, tax revenues must at least be used in a way that benefits the people. If this happens, there will be little reason to complain. The pension programs benefit only those who work in special fields. But civil workers and soldiers do not reign over citizens. They exist for the benefit of citizens.
Citizens hire civil servants and soldiers to get quality public service and safety, respectively. Korean citizens are not yet rich.
They are experiencing hard times, but they trust the government and participate in the public pension program to prepare for the future after retirement.
But the pension scheme has been changed so that subscribers will receive fewer benefits than promised.
Even though ordinary people are not better off, civil servants and soldiers are being paid with their tax money because the services they offer are important to society.
Revisions in the pension laws also made it so that deficits, which occur when it comes time to pay benefits to retired civil servants and soldiers, are made up from taxpayer money. However small or large the deficits may be, the people’s tax money is used to make them up.
Politicians use pension policies as a way to win voter instead of reforming them according to economic principles. That is because pension schemes pay off after decades but the term of an administration or lawmaker is five years. So all of the past administrations guaranteed high benefits to interest groups even though they knew it would bring future disaster.
In 2001, the civil servants’ and soldiers’ pension programs were revised because the interests of these groups and politicians’ strategies for becoming popular fit together.
Using pension programs, politicians have longer careers and certain interest groups get huge benefits. Compromises are made easily when drawing or revising pension schemes.
In the process of making policies, even if a majority feels a given policy has flaws, they do not form a group to protest against it because burdens caused by the flaws are not huge when the people share them together.
That is why the public pension program, to which 17 million people subscribe, was easily revised even though it now offers fewer benefits. Meanwhile, there was a huge debate on the revision of the public servants’ pension program, which has 1 million subscribers.
It is understandable that civil servants are special employees and are not highly paid. That is why ordinary citizens pay half of the costs of their pension program. This allows an appropriate amount of money to be paid in benefits.
But the benefits that the pension programs provide are higher than the funds’ profits. Deficits are covered with taxpayers’ money. That is unreasonable. This compensation won’t go away in a few years. The losses will increase year after year, and in 2010 they will surpass 3 trillion won ($3.28 billion).
When the pension programs for civil servants and soldiers have this structural flaw, we can say they no longer serve the people but they are a privileged class that reigns over the people.
If pension programs are examined on the basis of economic factors, most people agree that the programs in question are wrong and need to be revised.
But pension reform can be done only by lawmakers, and lawmakers respond to the people. The majority of the people are now quiet but they are very slowly gathering together. Once they do gather, they will wield enormous power.
We have a presidential election this year. No presidential candidate will dare promise to reform the pension programs for civil servants and soldiers. In 2001, the law on pensions was revised while the people were not paying attention. But now, the people are starting to feel the heavy burden of paying for the deficit in the pension schemes with their tax money.
In the National Assembly this year, the revision of the pension programs for civil servants and soldiers must be debated.
The goal of the revision is clear. The people are not interested in details of complicated pension programs. There is only one thing to be done. The deficits in the pension programs cannot and should not be paid with taxpayers’ money.

*The writer is a professor of economics at Ajou University and the secretary general of the Citizens United for a Better Society. Translation by the JoongAng Daily staff.

by Hyun Jin-kwon

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