Fix the public pensionsSettlement of accounts for fiscal year 2014 released by the government Tuesday explicitly shows why the long sought-after reform of the civil servants pension program is extremely urgent. The amount of Korea’s national debt reached nearly 1,211.2 trillion won ($1.11 trillion) last year, a 93.3 trillion won increase from a year earlier.
However, 47.3 trillion won, or 50.7 percent, of the increase came from estimated liabilities for the debt-ridden civil servants and veterans pension programs. In other words, the government poured 1.3 trillion won more into sustaining the two public pension programs than the money it spent to revive our supine economy. The remarkable increase of the debt stemmed from the rapid increase of pensioners and payments to them.
The government can hardly handle such an enormous amount of debt in its public pension schemes. It must spend a whopping 524 trillion won to maintain the debt-ridden government employees pensions. That amount came close to our national debt of 530 trillion won. Added to that are estimated liabilities amounting to 120 trillion won for the veterans pension program. The government has to spend 3 trillion won this year alone to make up for the deficit in the civil servants pension program. In 2018, the money the government must spend to compensate for deficits in the government employee pensions will exceed 5 trillion won. If civil servants pension reforms are delayed further, the deficit will soar exponentially to the point of pushing us toward national bankruptcy.
It is not the time to be content with our relatively sound fiscal health. Of course, the share of our national liabilities - which combine central and local government debts - is 35.7 percent of gross domestic product, much lower than the OECD average of 74.1 percent. But if you include the estimated liabilities for the civil servants and veterans pension programs, it’s a totally different story. Even though those estimated liabilities are not taken into account for comparisons among OECD member countries as they are not directly borrowed by the government, it is an international trend to regard those liabilities as part of national debts.
The government yesterday decided to work on our fiscal health by reducing 10 percent of more than 2,000 state-funded projects across the board. We welcome that. But it will prove meaningless if the government does not aggressively fix the budget-guzzling civil servants pension program. If the government kicks that can down the road to future generations, that’s a dereliction of its duty.
JoongAng Ilbo, April 8, Page 30