Pensions still stir emotions

Refusing the president’s repeated calls for him to return to work, Health and Welfare Minister Chin Young said the reason he stepped down was his opposition to the one element of the president’s decision to pay a basic pension to lower-income senior citizens. He said that basic pension should not be reduced if the potential recipient had earned a job-related pension from the national pension system.

Two days after he submitted his resignation, Chin was a guest at a wedding ceremony and met a group of reporters there.

“One of the reasons that made me resign is the basic pension program,” Chin told reporters. “I have constantly expressed my opposition to linking the national pension to the basic pension.”

Under the president’s plan, watered down from a universal pension because of fiscal woes, the government will give a basic 200,000 won ($186) monthly pension to all Koreans aged 65 or older in the bottom 70 percent of their income bracket.

Chin’s opposition is to the program’s offer of higher basic pensions, up to 20,000 won more, to people who have never contributed to the national pension system. People who have contributed because of their earned income for more than 11 years would receive a reduced basic pension, assuming they are not in the top 30 percent of Korean senior-citizen income earners.

“Even now, I still oppose the idea,” Chin said. “So how can I persuade the people, the National Assembly and the opposition parties to accept the basic pension program, which I also oppose? This is a matter of conscience.”

That benchmark of 11 years or fewer of national pension payments allows a person to receive whatever pension they qualify for, plus the full 200,000 won basic pension. After 11 years of contributions, potential recipients would see that basic pension lowered by 10,000 won per additional year of contributions.

Kim Han-gill, leader of the largest opposition party, the Democrats, agrees. He complained that the new basic pension program is unfair to those who have contributed to a national pension.

“It is an absurd policy to penalize those who diligently paid for a national pension, not giving a reward to them,” Kim said on Saturday at a seminar in Jeonju, North Jeolla.

The Blue House rejected that logic.

“You will receive the designated amount of national pension, without any changes, as well as the basic pension in addition,” Choi Won-young, the senior secretary for employment and welfare, said at a briefing yesterday. “So the longer you pay for a national pension, the more you will receive in total, combining the two pensions.”

For instance, Choi said, a person of age 30 who doesn’t pay into the national pension would receive 200,000 won in a basic pension at age 65. If he lives for 20 years, he would have received 48 million won.

But if the same man pays 90,000 won monthly to the national pension for 11 years or less, he would receive 183,000 won from his work-related national pension plus 200,000 won in the basic stipend monthly, or 81 million won in total over 20 years and subtracting his original national pension contributions from the calculations.

If he pays into the national pension scheme for 20 years, he will receive 319,000 won from that source at age 65, although his basic pension would be only 158,000 won per month. But his total receipts over 20 years, again subtracting his pension payments, would be 93 million won.

Currently, all Korean employees pay into the national pension system, with contributions automatically deducted from their monthly salary or wages.

“The new basic pension system has good characteristics to guarantee the long-term stability of basic pensions and ease the burden on the next generation by linking them to national pensions,” Choi said.

He also spoke about concerns that the government could dip into the national pension fund to offer basic pensions.

“The basic pension will be supported by taxes only,” Choi said. “We won’t spend a single won from national pensions for it. We also planned the program for a larger basic pension in the future.”

BY KIM HEE-JIN [heejin@joongang.co.kr]