Pension guarantee law not neededThe National Assembly committee on health and welfare has passed a bill requiring a state guarantee to provide funds if the national pension scheme runs out of money. The government strongly opposes the legislative move, saying no state in the world is legally accountable for public pensions. The ruling Saenuri Party, however, wants to push ahead with the bill to ease public concerns about the future solvency of the fund.
We understand steps are necessary to ease public jitters and prevent further withdrawal from the public scheme. But it does not need to be mandated in law. If state guarantee becomes statutory, the national pension would be included in the potential national liability, under International Monetary Fund guidelines, leading to ballooning national debt. The national pension fund is expected to run short by 2060. It is too hasty to guarantee payment for something that may happen 47 years hence, a move that would only fan the flames of insecurity about the pension program.
Voluntary, or nonemployer-backed, subscriptions to the national pension scheme have begun to drop and young people are unhappy with the program not because it may run out of funds, but because of President Park Geun-hye’s campaign promise to pay basic monthly allowances to the elderly according to contributions to the program. What needs to be addressed first are the complaints and questions about the new basic elderly scheme. The legislature is barking up the wrong tree by addressing a fund shortage that may happen in the distant future.
The revised bill on the national pension fund passed the standing committee and is under review by the Legislation and Judiciary Committee. The committee can compromise by indicating the government’s will to supply for the fund shortage without prescribing a statutory obligation. If the purpose is to ease public concerns, the bill should reflect that without adding to the burden of government debt. The government and ruling party also should try to work more closely and coordinate policies to avoid cacophony in the future.