Fix civil servant pensionsIt would cost taxpayers more than 4 trillion won ($3.8 billion) next year to cover the losses from the deficit-ridden pension programs for civil servants and career soldiers. Tax subsidies to sustain the two money-losing pension plans will likely shoot up astronomically given the speed at which the number of retirees is growing, thanks to longer life expectancies and the inflation rate.
That 4 trillion won would have been enough for President Park Geun-hye to fulfill her campaign promise of a minimum monthly cash allowance for all senior citizens over 65, without needing to reduce the size of the allowance at the expense of her credibility. Her basic pension scheme is under fire for being connected to the national pension plan. A government-sponsored national pension development committee recently recommended revising the national pension law to hike monthly premiums incrementally to 13 percent or 14 percent of incomes from the current 9 percent.
Despite all the controversy surrounding the national pension scheme, the separate state pension system for public officials remains intact. Civil servants get paid a pension at 70 percent of their income levels, compared to 51 percent for the regular national pension. Civil servants have secure jobs until they retire and get a comfortable pension after retirement. Pensions for career soldiers were revised in July to increase premiums to sustain the current level of remittance, helping to save 200 billion won in tax subsidies a year. Reform to the public servant pension scheme was attempted in 2009, but pushed back to 2015 because of union protests.
The civil servant pension scheme must be fixed immediately. It is an out-of-date, unsustainable benefit that guarantees all civil servants get more than they contribute. President Park had pledged to fix these sorts of problems. Reworking the civil servant pension is imperative for social justice and fairness with the national pension scheme. Japan, which has been working on its own pension reforms since 1986, will be combining regular adult pensions and civil servants pensions beginning in 2015. Similarly, our civil servant pensions should be overhauled, with premiums raised, payouts lowered and the minimum age increased. In the longer run, they should be absorbed into the national pension scheme.
The younger generation is suspicious of and enraged over the operation of national and civil servant pensions. Reforming public servant pensions should not be left to public officials, but led by a neutral group, which includes politicians, to push ahead with action.