The elderly need a hand

When experts are asked what kind of welfare needs the most attention in Korea they inevitably point to the high poverty and suicide rates among our elderly. Korea’s poverty rate among its senior population hovers at 48 percent, triple the average for the Organization for Economic Cooperation and Development members. The suicide rate shoots up in people over the age of 55. This is the generation that worked around the clock and is credited with the country’s miraculous rags-to-riches transition. They have been utterly cast aside and neglected to the point that they decide to end their own lives — because they can’t afford to go on living. It is an ironic and sad tragedy for
the country.

Despite this shameful reality, the government and politicians have done little to address the problem. Rival political parties agreed to organize a special committee to strengthen public pensions and eradicate poverty in the aged while passing a bill to reform the public employees’ pension scheme on May 29. But they have not had any working-level discussions since, although the deadline to organize a body was set for Oct. 31.

This raises suspicion that the parties offered to set up the body to silence complaints about the reforms of the civil service pension system without any real will to address poverty among seniors. Their attitude is a big disappointment to someone like me who had hoped the establishment of a special committee or body could help solve such a serious problem involving the senior population.

Korea joined the ranks of advanced nations in the mid-1990s and is now striving to make it into the top 10 group. But Korea’s poverty rate among its elderly is the highest among developed countries because its history of pensions and welfare is relatively short. Most developed countries as well as Latin American nations started social security systems long ago, allowing their elderly population to grow old comfortably.

Korea’s public pensions began much later. The government employees’ pension system was first started in 1960, followed by veterans’ pensions in 1963 and teachers’ pensions in 1973. The national pension system for the general population only began in 1988. It first was applied to employees on permanent corporate payrolls and then expanded to rural areas in 1995 and self-employed businessmen in 1999. Because the public retirement plan was established so late, those eligible to contribute make up just 35.3 percent of the people aged 60 and over.

Basic pensions handed out to all senior citizens were first employed in 2008 and expanded in 2014. But the target is too broad covering 70 percent of people aged 65 and over and the monthly payment of 100,000 won to 200,000 won ($85 to $170) does little to cover living costs for elderly citizens. The government also has a basic subsidy program for elderly people, but because it is only provided to senior citizens who do not have children, only 6 percent of the people aged 65 and over benefit from it. Despite such programs, the poverty rate among the elderly worsened from 45 percent in 2007 to 48 percent in 2013.

Senior poverty is worsening despite more benefits because the programs are poorly designed. Since there have been ample studies pointing out problems in existing programs, it won’t be difficult to come up with solutions. For example, the basic allowance programs could be combined under a single comprehensive aid scheme for the elderly. Eligibility should be limited to the impoverished so that
payouts can be appropriated to sustain the minimum living cost for people under different conditions.

There could be extra costs from changes in the system, but as time passes, there will be more pension beneficiaries who will be less eligible for basic allowances. The national pension also could become rationalized if a premium rate that has been fixed at 9 percent since 1998 is raised. Pensions for special classes like veterans and teachers should be united under the national pension to ease inequalities in benefits.

The government and politicians have been sidestepping the topic of reforming public pensions in fear of losing favor with voters. The ruling party wants to reform the labor sector and the opposition wants to take on the chaebol sector. Who would think they are serious about any reform when they turn a blind eye to the sufferings of our elderly?

By Suh Sang-mok

*The author is the head of the Sustainable Management Foundation and a former health and welfare minister.