Panel urges pension credit boost for birthsIn a sign of desperate efforts to raise the country’s low fertility rate, the government may give women pension subscribers an additional 12 months of pension subscription credit starting with the first baby they have.
Currently, a maximum of 50 months of pension credit is allowed and starts with the second child.
The National Fund Management Committee yesterday proposed the pension benefit expansion during its public hearing at the Korea Chamber of Commerce and Industry in Jung District, central Seoul.
“The pension subscription credit will be given for each child up to a maximum of 60 months, with all amounts covered by the state coffers,” said the committee.
Germany gives three years of pension credit for bearing children, while Sweden allows up to four years.
South Korea’s birthrate last year was 1.3, the lowest level among member nations of the Organization for Economic Cooperation and Development.
The committee makes a list of pension reform proposals for the government every five years after assessing changes in population, birthrate, life expectancy and economic growth.
The committee also recommended that the government cover all 21 months of the mandatory military service for drafted servicemen by giving them a 21-month pension credit. Currently, the National Pension Service gives a six-month credit.
The committee also proposed that full-time homemakers, who at one point contributed to the pension scheme, be eligible for pension benefits. Under the current regulation, a housewife or husband economically reliant on a spouse are excluded from pension benefits even if they paid for the pension in the past.
This exclusion of full-time homemakers has existed since the pension service was established in 1988. The idea was that even when a woman’s economic activities were insignificant, they could live off their husband’s pension in order to cut back on overlapping pensions.
Last year, 5.39 million people were excluded because of the regulation.
Besides presenting a list of proposals for the pension service, the committee also predicted the pension fund will spend more than it takes in by 2044 and funds will be depleted by 2060, due to extended life spans and low fertility rates.
The pension fund currently contains a total of 41 trillion won ($36.6 billion).
“Though birthrates have shown an increase [in recent years] along with an increasing number of pension subscribers that will have positive effects on the pension scheme, an increase in life expectancy and more pension benefits as a result will offset those positive effects,” said the committee in a statement released at the hearing yesterday.
The Park Geun-hye government will review the reform proposals for the national pension and will submit the pension revision for passage at the National Assembly in October.
BY KANG JIN-KYU [email@example.com]