We need swift pension reform

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We need swift pension reform

The ruling Saenuri Party’s new floor leader, Yoo Seung-min, has accelerated the agenda to reform the pension system for government employees. Before meeting with union representatives part of a consultative reform committee, Yoo said he will ask the opposition party to present its ideas to examine all possibilities. He assured union leaders that legislators would prudently draw up an overhaul, but he asked them to respect the government’s agenda to finalize a decision by April.

Reform plans seemed to be picking up speed until the Park Geun-hye administration’s minister of personnel management caused an upset. Minister Lee Geun-myeon, who attended the consultative meeting on pension reform, introduced an outline on a set of reform proposals by the government. But when faced with objections, he said it was just a draft.

The alleged government proposal was sharply toned down from the ruling party’s set of ideas, which are designed to work in favor of government employees. The Saenuri Party’s current proposal would see pensions for retired government employees who worked for more than 40 years reduced to 50 percent of their average lifetime salary, down from 76 percent now. The ministry of personnel management, on the other hand, proposes a scale-down to 60 percent while limiting severance pay. But considering Korea’s growing life expectancy rate, receiving more pension would be more advantageous for government employees. The government proposal recommends that new employees receive the same benefits as those on the national pension system, which would significantly increase the gap between the existing pension package and the one for new employees.

Minimum yearly contribution was also reduced to 10 from 20 years in the plan. If government employees who have worked less than 20 years get monthly pensions instead of a lump sum severance, the loss to the government employees’ pension system would be greater. Other benefits should also be shaved on par with the national pension program if the government wants to lower minimum eligibility to 10 years.

The current eligibility, 20 years, with contributions to the national pension program is reasonable enough. The ministry was previously reluctant to reform the pension program for government employees. Liabilities, however, have reached 484 trillion won ($440 billion), putting each citizen 9.45 million won in debt. Practical and fundamental changes must be made - and quickly.

JoongAng Ilbo, Feb. 13, Page 30
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