Pension procrastination

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Pension procrastination

The main opposition New Politics Alliance for Democracy (NPAD) plans to propose that government employees pay 28.6 percent more in insurance premiums and get 13.2 percent less in payouts as part of reforming the pension plan for public servants. Monthly pension payments would be capped at 2.97 million won ($2,710) and any excess amount would be paid in a lump sum.

Yet the party’s next steps for its reform outline are unclear. Rep. Kang Gi-jung, who leads the NPAD’s task force on public pension reform, said the party will finalize its draft after debate with experts and simulation tests, and will unveil it through a social consensus process. This could be interpreted to mean the main opposition won’t reveal its outline unless the legislature forms an ad hoc comittee representing all sectors of society to reach agreement on pension reform. The party has blocked the ruling Saenuri Party from submitting its reform outline for review at the National Assembly’s Committee on Security and Public Administration Committee.

The NPAD insists on forming a committee that would include representatives from the public employees’ union, which vehemently opposes any changes. A reform attempt in 2009 was scaled back significantly from the original government proposal after union members were included in the reform committee. The NPAD’s insistence on including union members again begs the question of whether the party is serious about pushing ahead with reform. If attempts to reform the government employees’ pension plan reform fail this time as well, the burden will be thrown to the public, whose taxes sustain the money-losing program.

Its draft outline so far also is lacking. Like its ruling rival, the party suggests raising contributions and reducing payouts. But the increase is 1 percentage point lower than the Saenuri’s proposal. That would mean about 40 trillion won less saved through 2080. The NPAD also suggests the same rate guidelines for existing and incoming government employees. But in view of the fact that public pensions should be merged in the long run, new recruits’ pension terms should be equal to those of the national pension service.

The NPAD must stop dragging its feet on government employees’ pensions and submit its plan so that serious debate can begin and agreement reached, sooner rather than later. Opinions of government employees could be incorporated in the final stage.

JoongAng Ilbo, Nov. 27, Page 34

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