Park renews pledge to push for key campaign promises

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Park renews pledge to push for key campaign promises

President-elect Park Geun-hye has vowed to keep one of her key campaign pledges to set up a large public fund to address mounting household debts and introduce a new pension scheme for elderly people, her transition team Saturday.

Less than a month before Park's new government will be inaugurated, concern has risen over the feasibility of some of her campaign pledges, given enormous amounts of funds needed that may likely jack up tax rates.

However, Park confirmed those campaign pledges during a meeting Friday with her transition team, according to team members who had met her.

"As soon as the new government sets sail, we should resolve the household debt problem," one team member quoted Park as saying.

Curbing the household debt is one of the main tasks for the president-elect, as record-high household indebtedness has curbed savings and spending in Korea, crimping domestic demand and hurting the economy.

South Korea's household debt reached some 930 trillion won (US$872 billion) as of the end of September last year, tantamount to more than 70 percent of the country's gross domestic product for 2011.

During her campaign, Park proposed setting up a public fund worth 18 trillion won to take over part of mortgage debts owed by homeowners who are deemed to be unable to pay off the debts. But criticism has mounted that the scheme could create a moral hazard among heavy debtors, and runs against market economy.

"We need to draw up sort of strict criteria assessing their ability to pay off debts, thus preventing moral hazard from stirring up," the same transition team member quoted Park as saying.

As to a new pension plan aimed at helping the country's elderly citizens, Park stressed that her government will implement the new policy as was promised, he said.

"South Korea's elderly citizens are suffering poverty, and the level (poverty) is the highest among the OECD member countries," Park was also quoted as saying..

The proposed pension scheme is designed to provide senior citizens aged 65 or older with 200,000 won a month, nearly double from the current amount of allowance.

But the new scheme invited outcry from young people as her incoming government had hinted at financing the scheme with part of contributions made by state-run National Pension subscribers, which could speed up depletion of the national pension fund, and worsen the generational imbalances in national pension benefits.

Critics say the national pension scheme was so badly designed from the beginning that younger subscribers will receive much lower benefits compared with their older counterparts now. [Yonhap]

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