Don’t jeopardize pension savingsTaxes and pensions are two very different things. People pay taxes as their duty to share the burden of national maintenance and governance to improve their living standards. Citizens subscribe to public pensions as savings for their retirement or old age. Despite an obvious difference, however, politicians and the government do not seem to agree. They opt to believe that the money comes from the same coffer. Otherwise, they wouldn’t think up such ridiculous ideas.
President-elect Park Geun-hye’s transition committee is mulling draining 30 percent of funding for basic monthly benefits to senior citizens out of the national pension. Senior poverty is a serious social problem, and we don’t blame the new administration for trying to come up with new funding to help the elderly. However, the funding must come from tax revenue, not public pensions.
What the committee must do first is overhaul many public pensions. The public servant and soldiers’ pensions are already in the red and the deficits are growing. The deficit in the public servant pension that totaled 54.8 billion won ($51.9 million) in 2003 ballooned to an estimated 1.46 trillion won last year. The deficits are being covered up with taxes, meaning the public is providing for the retirement comforts of civil servants. The government revised the related law in 2000 to sustain the public servant pension. As much as 8.26 trillion won of taxpayers’ money was injected as of last year to sustain the money-losing public servant pension. The deficit is estimated to reach 6.2 trillion won in 2020 and 14.9 trillion won in 2030.
The reason for the catastrophe is simple: The number of people on the receiving end is increasing and they are getting more in return than they paid during their working days. The pension system is designed to return to public servants as much as triple the amount they paid, whereas ordinary citizens get 1.7 times more. Despite the reform in 2009, the public servant pension still offers greater returns at an earlier receiving age than the national pension. The imbalance in the pension system further contributes to the social and wealth discrepancies.
If Park wants to fulfil her promise to offer basic pension funds for senior citizens, she should find a way without touching the national fund.
Ordinary citizens are already discriminated in pension benefits more than civil servants, teachers and soldiers. At the current rate, the national pension will run into a deficit after 30 years and run out of funds 40 years later. The transition team must scrap any idea that would jeopardize people’s pension savings.