No policy can satisfy everyonePresident Moon Jae-in has ordered the Ministry of Health and Welfare to “totally overhaul” its plans to reform the National Pension System. His decision may put the long-awaited pension reform in trouble. If the government fails to fix it soon, the pension service, which could run out in 40 years if the current pace continues, could go adrift during the 2020 legislative elections. The longer the delay, the greater the financial burden the next generation will have to bear.
President Moon ordered the overhaul after considering the alarming increases in premiums. Three of the four proposals by the ministry aim to raise premiums to at least 15 percent of people’s incomes from the current 9 percent. The idea of lifting the premium was not proposed by the ministry. It was first proposed by a number of experts on the issue, who concluded that the national pension cannot be sustained if the government does not raise premiums. The ministry then submitted their proposals to the president without revising them.
The experts had to reach the painful conclusion because the fund may run out in 2057 — three years earlier than expected — unless younger workers start paying one-fourth of their income as a premium for the national pension.
President Moon believes that the national pension should cover 50 percent of people’s incomes while they are active. That calls for a hike in the premium. But he opposed the proposals probably in the face of the unwanted effects of his signature “income-led growth” policy, as seen in the reduction of jobs and lower incomes of the working populations instead of improving their livelihoods. Under such circumstances, he can hardly favor the idea of raising the premium.
Moon said the rate hikes do not reflect our standards. We wonder what he really meant by public standards. Few would agree to the premium increases. But a head of state sometimes should have the courage to push a policy even if the public is reluctant to accept it. He must first persuade them. Otherwise, his rejection of pension reform only translates into a refusal to reform. There is no policy that can satisfy everyone.
JoongAng Ilbo, Nov. 9, Page 34