Moon says gov’t to legally guarantee pensions

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Moon says gov’t to legally guarantee pensions

President Moon Jae-in said Monday the government would ensure national pension payments as long as the government exists and ordered officials to stipulate that clearly in a legal context so that the public needn’t worry about their pensions in the future.

Emphasizing that the national pension system is run by the government to guarantee pensions to people who paid in when they were economically active, Moon said there were “unfounded concerns raised” that retirees might not get pension payouts if the system is mismanaged.

“Since the government is responsible for the pension system, a situation in which people will be stripped of their pensions will not be possible as long as the government itself exists,” noted the president.

“I ask officials to stipulate the government’s responsibility for the pension system as a way to alleviate people’s anxiety,” he said.

Moon’s instruction came amid growing public jitters over the state of the 30-year-old pension system.

The National Pension Service estimated earlier this month that its funds will dry up by 2057, three years earlier than an estimate five years ago, amid a rapidly aging population and a birthrate that stood at 1.05 births per woman last year, despite the government spending more than 126 trillion won ($113.1 billion) since 2006 to encourage Koreans to have kids.

Existing law on the National Pension Service stipulates, “The government should establish and implement measures to ensure stable and continuous provision of pension benefits.”

Critics contend such a stipulation is too abstract and that the government should give a more explicit statement of its resolve to fulfill its responsibility as a universal pension plan operator.

Aside from coming up with a clearer stipulation of the government’s responsibility, Moon also noted the government will take into full account public opinion as it revises the pension system.

“Since the owners of the universal pension system are the people, the most important thing about reforming the pension system is to win social consensus,” he said.

“While it may take a long time to reform the pension system, I ask the government and the National Assembly to have a thorough discussion to produce a reform plan with the people’s consent,” he added.

The government plans to submit pension reform plans to the National Assembly by October, after which they will be debated by political parties.

Two basic reform plans were proposed by an advisory group to the National Pension Service. One plan calls for maintaining the current 45 percent income replacement ratio - the percentage of one’s working age income covered by welfare payouts - but raising contributions to 10.8 percent of a person’s salary next year from the current 9 percent.

The other plan envisions dropping the income replacement ratio to 40 percent while raising contributions to 13 percent by 2033.

Moon hinted it may take years before the final pension revision will be ratified, recalling that it took four years for the last pension revision bill, which was submitted to the Assembly in 2003, to be passed.

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