Reforms are just the beginning

Rival parties on Friday passed a bill to overhaul the money-losing civil service pension system in a display of last-minute bipartisanship. Skepticism about the approval prevailed after the main opposition party added additional conditions, such as the resignation of the health minister, a redesign of universal pension programs like the national pension system and basic allowance payouts for poor senior citizens. Another stumbling block was a revision in the law governing the National Assembly authorizing the assembly to request changes to administrative legislation such as presidential decrees and the prime minister’s ordinances. The ruling and opposition parties wrangled late into the night and extended the extraordinary parliamentary session that was scheduled to close on Thursday to vote for the reforms in civil service pensions early Friday after agreeing to discuss an extensive overhaul in other pension programs through a newly created independent body.

Hawks disgruntled about the change to the National Assembly Act are demanding the president veto the bill. What’s more important is to proceed with reforms regardless if some leave much to be desired. If the civil service pension scheme is not reformed, hefty amounts of taxes will be needed to keep it afloat. The reforms passed Friday will save 333 trillion won ($300 billion) over the next 70 years.

Pensions get harder to fix when the people who receive them increase in number. That is why reforming the civil service pension program became more and more challenging. Government employees are a vital votes in elections. Germany struggled to integrate the pension programs of the East and West after unification.

This should be just the beginning of reforms of public pensions. Separate pensions for teachers and soldiers remain unreformed. The problem of easing discrepancies among pensioners has not been properly addressed. Even under the new design that reduces payouts, retired government employees get 70 percent more than civilians. Younger government employees will get much less than their elders. If the pension structure remains unchanged, the future generation will be overburdened with various taxes. The economy will lose vitality and more and more people won’t be able to afford to pay taxes and contributions to social security.

A new body must discuss fundamental changes to all public pension policies. Social benefits must be sustainable for the future generations while helping the elderly.

JoongAng Ilbo, May 30, Page 30