Welfare meets reality

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Welfare meets reality

In its final meeting, the People’s Happiness Pension Committee - an ad hoc presidential advisory board commissioned to come up with ways to reform the public pension scheme - floated recommendations for best accommodating a basic living allowance for the elderly without wreaking havoc on the existing pension system.

It suggested that welfare payments be given out to senior citizens in the lowest income bracket, with the amount determined by monthly income levels and contributions to the national pension system. Or they could be limited to elderly people whose monthly income doesn’t reach 150 percent of the basic living cost, which would be 830,000 won ($742) for an individual or 1.36 million won for a couple. A third idea is to give out the same amount - 200,000 won - to all senior citizens in the lower income bracket.

Regardless of which idea is accepted, however, President Park Geun-hye won’t be able to fully keep her campaign promise that 200,000 won will be paid out to all seniors every month.

The committee’s final set of proposals are an inevitable compromise with the reality on the ground. If the government follows through with its original campaign promise on the subsidy, it would have to come up with 60.3 trillion won between 2014 and 2017 and a total of 161.3 trillion won up until 2040. According to the new proposals, the government could lower the cost to 41.1 trillion won at maximum for 2014-2017 and to 88.6 trillion at the lowest by 2040.

Moreover, the committee shifted the general idea of the program from a blanket benefit for the elderly to a selective one. It’s a feasible alternative for an affordable and sustainable welfare system.

The pension guarantee the health ministry announced last month for four major illnesses, such as cancer and heart disease, also applied the majority rule.

During the last presidential campaign, the ruling party promised to increase the government’s insurance coverage of the illnesses to 100 percent by 2016. But it revised the coverage rate down to 83 percent by opting out of nonessential treatment.

The government will have to be consistent in its application of the majority rule to its welfare policy. It will have to persuade labor union groups and farmers’ interest groups that walked out of the pension committee to protest the government’s change in position and reach a consensus on the basic allowance scheme.

The National Assembly would also have to positively review the proposal to set the guidelines for a welfare system that can be sustained for generations to come.
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