Lawmakers studied plans for sweetheart pensions

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Lawmakers studied plans for sweetheart pensions

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Despite their pledges to surrender privileges and put Korean politics on a cleaner foot, the ruling and opposition parties recently considered introducing a special pension system for sitting lawmakers while scrapping the current system of providing pensions to elderly former legislators, the JoongAng Ilbo reported yesterday.

Although the plan was ditched, it was confirmed lawmakers studied it last year based on systems in other countries.

In the months leading up to the presidential election of last Dec. 19, the ruling Saenuri Party and the main opposition Democratic United Party created a Special Committee on Political Reform and a six-member subcommittee under the House Steering Committee to talk about giving up privileges.

The lawmakers discussed revising the pension system for elderly members of the Constitutional Government Society, an association of former legislators, along with other reform measures.

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The perks of being a lawmaker - or even an ex-lawmaker - had become an issue in the presidential campaign. As of now, a lawmaker enjoys about 200 perks including a 137.96 million won ($130,028) annual salary and an additional 99.15 million won in various expenses. A lawmaker is also entitled to hire seven aides and two interns and get 1.1 million won a month in gasoline money.

A former lawmaker over 65 years old - whether he or she served in the post for one day or many years - is currently entitled to 1.2 million won a month in pension payments. The Act on Promotion of the Constitutional Government Society, an association of former lawmakers, is used as a legal vehicle for the subsidy.

In contrast, a Korean War veteran received an average of 120,000 won a month at the time. Starting this year, the payment was raised to 140,000 won per month.

For a regular taxpayer to receive 1.2 million won a month from the National Pension office, he or she would have had to pay into the scheme 351,000 won a month for forty years. Former lawmakers, however, are not making any payments because the pension is in the form of a subsidy.

Last August, the special committee decided a revision of the pension system was one of its key goals.

After discussions, the committee announced in November a plan to limit subsidies for lawmakers. At the time, the lawmakers said sitting lawmakers, former lawmakers younger than 65 years old and former lawmakers who served for less than a year would be excluded from the pension system.

They also agreed that former lawmakers whose monthly incomes are larger than the average household income of an average office worker for the previous year or those with assets worth 1 billion won and more wouldn’t be eligible for the pension.

People who lost their lawmaker seats because of criminal convictions or expulsion were also excluded.

However the committee did not make public at the time that it considered introducing a special lawmakers’ pension program. A report from the committee, obtained exclusively by the JoongAng Ilbo, showed that the ruling and opposition parties agreed to discuss the program, which would be similar to civil servants’ pensions.

“We need to commission outside experts to research the feasibility to provide pensions to lawmakers who are older than 65 years old,” the report said.

The special committee also used a comparative study of lawmakers’ pension systems in other countries created in September 2011 by the National Assembly Research Service. The report said there is a blind spot of old-age income security for lawmakers.

It noted that lawmakers’ pension programs in other advanced counties were designed to give more benefits than pensions for ordinary citizens. The report suggested that the lawmakers’ pension should be more generous than the national pension.

It even cited Japan, which scrapped its lawmakers’ pension system in 2006 after public criticism of unfairness. But, the report said, “The complete ending of the lawmakers’ pension in Japan will still come in 40 to 50 years,” and advised the lawmakers to introduce their exclusive pensions.

Representative Lee Cheol-woo of the Saenuri Party, who participated in the special committee as the ruling party’s chief for the pension system reform team, admitted that the discussion took place to introduce a pension for seating lawmakers.

“It is true that we talked about it,” Lee said. “But there was a consensus that it was premature to push it forward taking into account the worsened public sentiment.”

Another lawmaker on the special committee, Representative Park Beom-kye, said lawmakers who served multiple terms made the demand.

Experts said the move will make it harder for the country to cope with its widening pension crisis.

“The funds for the state-run National Pension Service are expected to run out before 2060,” said Yu Byoung-gyu, head of economic research at Hyundai Economic Research Institute.

“Various other pensions are also facing crisis,” he continued. “If lawmakers are making an attempt to keep their pensions, reform of the veterans’ pensions and the civil servants’ pensions won’t progress properly.”

Now that the presidential election is over, it also remained unclear if the legislature will actually pass the plan to reform the current subsidy program for former lawmakers.

Although the plan to reform the subsidy program was announced by the Special Committee on Political Reform in November, lawmakers only finished making a bill Wednesday, the JoongAng Ilbo learned yesterday, suggesting they had no intention of quickly concluding it.

With no bill, the legislature went ahead and approved a 12.8 billion won budget for the former lawmakers’ subsidy when it passed this year’s budget on Jan. 1.

The practice of providing a subsidy to elderly former lawmakers began in 1988 when then National Assembly Speaker Lee Jae-hyung provided 200,000 won each to the ex-legislators who were older than 70 years old. Lee, at the time, used his own expense account to provide the support.

Starting in 1997, the government budget was formally used for the program and a legal clause on the use of tax money was established in 2010.

Over the past decades, the payout was increased gradually from the initial 200,000 won a month to 1.2 million won a month.

According to the National Assembly, 429.8 billion won was spent in 1988 to support aged former lawmakers, but the figure went up nearly 30 times to 11.75 billion won last year and 12.83 billion won for this year.

Controversies surrounding the program continued for years. In April 2004, Ahn Hee-ok became a proportional lawmaker of the Democratic Party only to serve in the post for 26 days. He was criticized for receiving the benefit and the Constitutional Government Society changed the rules two months later to exclude people who served as lawmakers for less than one year.

Three years later the clause was struck down. “Former representatives who served for less than one year aggressively lobbied,” a National Assembly official said.


By Kang Tae-hwa, Ser Myo-ja [myoja@joongang.co.kr]

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