Perfect time for pension reform

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Perfect time for pension reform

The government is pressing ahead with a long-awaited pension reform for government employees and veterans, judging that now is the time to reinvent the deficit-ridden dual-pension system. Since the Sewol ferry disaster and the death of Private Yun from a beating by senior Army soldiers, the two groups have been under fire for receiving a hefty pension despite widespread corruption in officialdom and lax management of soldiers in the military.

We welcome the government’s decision. In a New Year’s address, President Park Geun-hye vowed to mend the three debt-ridden public pensions, including one for private-school teachers. Fortunately though, An Chong-bum, newly appointed presidential secretary for economic affairs, drew up a blueprint for pension reform as chairman of an economic innovation subcommittee of the ruling party before joining the Blue House.

Public pensions are like a ticking time bomb. Last year alone, about 2 trillion won ($1.93 billion) and 1 trillion won were drawn from state coffers to cover the civil servant and military pensions. A total of 22 trillion won is needed to make up for the deficit until the president’s term ends in 2018.

Public pensions are the biggest financial burden on the government. Last year, the government’s estimated liabilities of 596 trillion won for public pensions accounted for more than half of the national debt of 1,117 trillion won. Though the size of the debt varies according to the fluctuations of consumer prices, retirement and death rates, the debt will surely grow fast as a result of Korea’s rapidly aging population.

Public pension reform is like a Gordian Knot due to vehement resistance from the civil servant union and half-baked self-reform efforts by bureaucrats. This time, the National Assembly must take the lead in revamping the pensions system so that bureaucrats cannot step in.

It would also be better to integrate the three public pension systems into the national pension system in the long run. The government must stake its life on the reform.

JoongAng Ilbo, Aug. 8. Page 30

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