Moon must think ahead
Reform of the government employees pension program has started to take shape. The main opposition New Politics Alliance for Democracy presented its outline for reforms and the government and representatives of the government employees’ union reached an agreement on the guidelines to design new payout terms. It is the first meaningful step since the legislature formed a special committee for the purpose of reforming the money-losing pension policy 85 days ago. The main opposition party has been dithering in drawing up its own set of proposals. The development has brought hope for a final agreement on the makeover by the deadline this weekend.
The NPAD’s proposal, however, has nothing new. It suggests reducing the payout and increasing premiums. But it does not contain numbers for how much the reduction and increase should be. Without disclosing exact numbers, it is insisting that its proposal would reduce costs by more than the outline recommended by the ruling Saenuri Party.
The key to revising the government employees pension scheme is to reduce the fiscal compensations. It takes about 10 billion won ($9.08 million) a day from public coffers based on tax revenue to make up the losses in the deficit-ridden government employees pension. In order to keep severance payouts similar to their current level - 39 percent of what employees of a private enterprise get - the pension payout ratio must be lowered to 1.6 percent from the current 1.9 percent. According to the NPAD’s outline, the dual system where government employees receive more generous benefits than ordinary citizens subscribed to the national pension scheme does not change. It does not explain why government employees should go on receiving generous payouts when there is no financial means to support it. New government employees should be subject to broad national pension plan terms. Eventually, government employees’ pension should be incorporated into the national pension program.
But there is still room for compromise between the outlines of the two political parties. Both agree to readjust the terms for low-grade government employees and freeze payout rates for pensioners for five years.
Moon Jae-in, head of the NPAD, applauded the government’s will to reform the pension scheme and promised to meet the deadline to come up with a legislative agreement. The pension reforms will be impossible without the support of the main opposition. The party must think about the country’s future and the interests of the broader population instead of counting on votes of government employees in the next election.
JoongAng Ilbo, Mar. 26, Page 30