NPAD must reform public pension
An ad hoc body designed to draw up an agreement on an overhaul of the government employees’ pension scheme issued a statement that the money-losing pension policy requires a makeover. It’s the first time the main political parties, the government and representatives of the government employees’ union have come to a consensus on anything.
The government and ruling party have been trying to persuade politicians and government employees to redesign the exclusive pension program, which has incurred huge losses due to its overly generous terms compared with the universal national pension scheme to which other taxpayers subscribe. Unionized government employees have vehemently opposed any changes to their exclusive pension program.
Apart from a rhetorical agreement, the statement produced no other meaningful results after 73 days of discussion. The body has not even been able to agree on a timetable or outline. Needless to say, the fault lies with the main opposition New Politics Alliance for Democracy (NPAD). It failed to provide its own proposals while slapping down the government and ruling party’s version. Negotiations are impossible, and reform cannot gain momentum if the opposition merely responds to what its ruling counterpart proposes, without coming up with its own ideas.
The ruling Saenuri Party wants to change the payout ratio and period of the government employees’ pension to terms close to the universal pension scheme in order to balance out the differences between the two. The NPAD thinks that it should be the other way around: the universal pension terms improved to the levels of the government employees’ program. But it does not explain how the astronomical losses could be compensated. We believe that the opposition is merely playing along and trying not to lose favor with government employees, whose votes can number up to 1.3 million.
But the government and ruling party’s proposal is also hardly perfect. The gap in pension amount against total contributions still remains wide. Deduction levels - which are determined according to post-retirement income - also vary. The NPAD must draw up its set of proposals fast and try to work toward a constructive design.
The pension plan for government employees must be reformed immediately regardless of which party gains power after the next presidential election. If the current payout structure is maintained, the deficit will amount to 55 trillion won ($48.6 billion) over the next decade. The ruling and opposition parties must keep their promise to form a special committee and work toward a final outline to pass the bill before May 2. The labor sector announced a general strike next month. Also on the calendar are the by-elections. The reform drive could lose steam amid political issues. Legislators must not jeopardize the fiscal state because they fear losing votes.
JoongAng Ilbo, March 12, Page 34