Park would fund elderly welfare with tax money

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Park would fund elderly welfare with tax money

Published: 28 Jan. 2013, 20:56

박근혜 대통령 당선인이 28일 서울 삼청동 인수위에서 열린 고용복지분과 국정토론회를 마친 뒤 건물을 나서고 있다. 박 당선인은 이 자리에서 “새 정부의 핵심 국정지표는 중산층 70%, 고용률 70%를 이루겠다는 것”이라고 말했다. 왼쪽부터 유일호 비서실장, 박 당선인, 진영 부위원장. [중앙일보]

The presidential transition team has decided to fund the controversial proposal for an expansion of welfare subsidies for elderly people with tax money instead of drawing on the coffers of the National Pension Service, starting next year.

On Friday, at the state affairs debate session on the economy hosted by the presidential transition team, President-elect Park Geun-hye said that while the basic old-age subsidies need to be realized, the funding should not be taken from the National Pension Service, but instead come from taxes.

The transition team initially proposed to fund an expansion of the senior welfare subsidies to all elderly people over 65 by drawing 30 percent of funds from the National Pension Service.

The National Pension Service is a fund paid into by salaried workers and helps fund their retirements after the age of 61, while the basic old-age subsidy is paid by government funds.

Currently, senior citizens over 65 in the lower 66th percentile income bracket receive 97,100 won ($89) monthly in a basic government subsidy for senior citizens. Seniors with a higher income don’t receive any subsidies.

The transition team, in keeping with Park’s pledge, proposed that senior subsidies will be based on income, with the poorest seniors receiving double the current amount, while more affluent seniors will receive no less than 97,100 won, all of it funded with government tax money.

Because the National Pension Service is expected to be depleted within the next fifty years, the younger generation who has to bear the burden of paying the National Pension Service was especially opposed to the plan.

Financing this program over the next four years is expected to cost over 40 trillion won, according to independent analysts, much higher than the Saenuri Party estimates of 14 trillion won. But a viable solution to how that amount will be raised has not yet been proposed.

Welfare has been a central part of Park’s high-cost presidential campaign pledges. She added that the senior subsidies should be the “groundwork and with the addition of income-based pensions, enable people’s livelihood in old age.”

By Shin Sung-shik, Sarah Kim [sarahkim@joongang.co.kr]