Saenuri looks to calm outrage over pension plan

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Saenuri looks to calm outrage over pension plan

In a move to persuade public servants angry at the government’s attempt to reform their pension plans, the ruling party is considering a new proposal focused more on cutting payouts for high-ranking officials, key members of the Saenuri Party told the JoongAng Ilbo yesterday.

“There are suggestions that public servant pensions should serve the function of income redistribution, similar to that of the national pension system,” Saenuri Rep. Lee Hahn-koo told the JoongAng Ilbo in a telephone interview.

Lee is the head of the ruling party’s special committee on economic reform.

Under the current pension plan for public servants, payouts to retired government employees are directly proportional to their contributions. By contrast, under the national pension scheme, high-income earners contribute more while receiving fewer benefits, while low-income earners receive higher payouts than what they contributed.

In February, President Park Geun-hye made clear her intention to reform the deficit-stricken state-run pension system, including that for public servants. The pension system for public servants recorded an accumulated deficit of more than 12.2 trillion won ($11.69 billion) as of last year.

In 2013 alone, the government provided nearly 2 trillion won to make up for the loss.

Since the president addressed the issue, the Blue House, the administration and the ruling Saenuri Party have pushed forward with the agenda.

On Monday, the Korean Pension Association held a public debate to discuss a reform plan it had drafted at the request of the ruling party. However, 500 furious rank-and-file government employees protested the session, condemning the plan and shouting at organizers. The meeting was subsequently canceled.

The association initially drafted a plan to increase the contribution of public servants by 43 percent, while lowering the payout by 34 percent. Though, in an apparent attempt to satisfy outraged public servants, Saenuri Party officials yesterday said they will come up with a modified version of that outline.

Rep. Lee Cheol-woo, who heads a subcommittee tasked to push forward the overhaul of the public servant pension system, confirmed that stronger reform measures will be imposed on higher-level government employees.

“Senior public servants receive about 7 million won per month as a pension payout after their retirement,” Lee said. “But sixth-level public servants or lower will receive about 1.5 million won a month. Pension reform should include measures to guarantee their life after retirement.”

The ruling party’s special committee is currently considering a plan to revise the pension scheme, in which the government matches an employee’s contribution.

Under the proposed change, the government will pay the same amount to all employees’ pension schemes, regardless of their rank and contribution. Under the revision, lower-level public servants will receive more government contributions to their pensions than now and the gap between the payouts of a high-ranking official and a regular official will decrease.

The ruling party is also considering a plan to lower the monthly salary limit for a government employee who can receive a pension from the current 8.5 million won to a level similar to that of the national pension, about 4.08 million won. The change is intended to decrease the number of the retirees who receive high payouts.

As of the end of last year, 21.1 percent of 321,098 retired public servants, who served for more than 20 years, received a monthly pension of more than 3 million won. Among them, 1,853 received more than 4 million won a month.

The party also plans to lower pension payouts to public servants who earn an income after retirement. The party said its proposal for reform will be completed next week.

After the plan is discussed with the administration and the Blue House, the party will vote on the official plan. The Saenuri said it was aiming to sponsor a bill to revise the law governing the public servant pension system before the end of this year and see to its passage at the National Assembly in February or April.

No administration has yet succeeded in reforming state-run employment-based pensions. The government made three attempts to reform the public servant pension system in 1995, 2000 and 2008, but those efforts fell apart in the face of massive opposition by unionized government employees.

The reform drives were also commissioned to university professors friendly to bureaucrats, making the overhaul even more difficult.


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