Pension scheme must be revamped

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Pension scheme must be revamped

Hwang Woo-yea, chairman of the ruling Saenuri Party, said a special body will be formed under the party’s economic innovation committee to overhaul the ineffective public pension schemes exclusive to retired government employees, military officers and teachers.

While announcing a three-year plan to “innovate” the economy through reforms, deregulation and creative orientation, President Park Geun-hye said the government will map out a bill to improve those three pension programs. Now we may finally see progress. Time has long been ticking for the public pensions that have little left in the reserves. The government has been shelling out generous pensions for its retired employees and career soldiers through money from taxes. The teachers’ pension is also expected to run out of money within the next 20 years. The government needs 22 trillion won ($20.6 billion) to cover losses in the two broken pensions during its term. The amount is enough to pay out two years’ worth of basic pension for senior citizens without income. When left as it is, the specific-target public pensions will be one of the largest debt burdens for future generations.

Bureaucrats have protested that their retirement plan has already been overhauled in 2009. But the last move can hardly be called a reform. While the national contribution-based pension has been cut back to cover just 43 percent of monthly earnings of common salary earners, the downscale in government employees’ pensions stopped at 25 percent. Due to protests, the government proposed to push back the reimbursement age to 65 in 2009 and cut payouts to family members after the death of government employees by 10 percent. But these changes only applied to government employees who started work in 2010.

The reforms ended in gestures because they were proposed and carried out by government officials themselves. The pension reform committee in 2007 was comprised of government officials, union representatives and scholars. People unrelated to the pension took up less than one-fourth of the committee. University professors were also beneficiaries of the teachers’ pension.

It’s time that the National Assembly gets its act together. It should form a reform panel and subcommittees that include government officials for accounting and related purposes. In the long run, the government employee pension should be merged with the national pension scheme. Public pension reform should be the centerpiece of public-sector reforms. The government must set an example.

JoongAng Ilbo, Feb. 28, Page 30

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