Pass the pension reform billLawmakers will put the bill, designed to overhaul the government employees’ pension scheme, to a vote on Thursday as promised. They agreed to leave out the number on the contentious provision to raise the payout ratio from 40 percent to 50 percent, and will instead will put in a provision saying that further discussions to strengthen the system will take place in a newly created social body.
Although it leaves much to be desired, the reform bill must pass. If the civil servant pension program is untouched this time, the work of fixing the deficit-ridden scheme will be handed over to the next administration, as the political agenda over the next two years will be entirely about elections. The revisions in premiums and payout terms could help save 333 trillion won ($303.4 billion) in fiscal spending to make up for losses in the pension program over the next 70 years. Even if the pension runs back into huge deficits in six years, it is better than pumping money into a bottomless well in the meantime.
An interest group for taxpayers condemned the “feigned” reform that exploited the gap between different classes and generations. It claimed taxing ordinary citizens and young government employees without touching the pension reserves for older retired employees was deceiving the public and could conceivably undermine the country’s entire economy.
The new social body must discuss a fundamental restructuring of all the public pensions including the universal programs like the national pension and basic pension for senior citizens. It must also examine the selective programs for government employees, soldiers and teachers.
In the longer run, the government employees’ pension must be merged into the universal national pension policy. If the payout ratio is to be raised, premiums must also go up. A study in 2006 said to set the income coverage ratio at 50 percent and to raise insurance premiums to 12.9 percent at minimum.
The social body must keep concerned parties to a minimum and instead be filled with outside members that truly represent the voices of civilians and the young. A true reform can be only be possible when those who pay the bills participate.
JoongAng Ilbo, May 26, Page 30