Young lawmakers speak out for genuine pension reform

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Young lawmakers speak out for genuine pension reform

Published: 28 Mar. 2025, 00:01

Audio report: written by reporters, read by AI

Joo Jung-wan

The author is an editorial writer at the JoongAng Ilbo.

“Today’s pension reform bill amounts to nothing more than parents raiding their children’s piggy banks. Just because the parents agreed among themselves doesn’t make it right to take their children's savings.”

That was the pointed critique delivered by Rep. Chun Ha-ram of the Reform Party during a floor debate in the National Assembly on March 20, voicing his opposition to the amendment of the National Pension Act. In his analogy, the “parents” refer to the older generation, while the “children” represent today’s youth and future generations. Born in 1986, Chun spoke on behalf of younger Koreans, highlighting intergenerational inequities. He strongly criticized the pension parameter adjustment that raises the income replacement rate without introducing an automatic balancing mechanism, calling it a “Ponzi-like time bomb.”

Eight young lawmakers from across party lines hold a joint press conference at the National Assembly on March 23, stating that the pension reform "only worsens the generational imbalance." [NEWS1]

The result of the subsequent vote came as something of a surprise. The bill passed with 194 votes in favor out of 277 lawmakers present. However, 40 voted against it and 43 abstained — an unusually high level of dissent, particularly compared to the 17 other bills passed that day with overwhelming bipartisan support. While the leadership of both the ruling People Power Party (PPP) and the main opposition Democratic Party (DP) hailed the legislation as a “historic pension reform agreement 18 years in the making,” the vote revealed that many lawmakers broke ranks.

A political aftershock followed the passage of the pension bill, which centers on raising the contribution rate to 13 percent and the income replacement rate to 43 percent. On March 23, eight lawmakers — Kim Yong-tae, Kim Jae-seop and Woo Jae-jun of the PPP; Lee So-young, Jang Cheol-min and Jeon Yong-gi of the DP; and Lee Joo-young and Chun Ha-ram of the Reform Party — held a joint press conference. Their only commonality: all had voted against the bill.

Most of the group are in their late 30s or early 40s, and they spoke with a unified voice. “Amid deep distrust among young people, this reform only worsens the generational imbalance,” they said. “We are filled with sorrow and regret for the youth, teenagers and those yet to be born.” Their cross-party stance on a shared policy issue drew attention as a rare show of solidarity that transcended partisan politics.

So why are these young lawmakers rejecting the so-called “more contributions, more benefits” approach to pension reform? Their argument is simple: transparency. “We must be honest about who pays more and who gets more,” they contend. The reality, they say, is that the older generation will receive more due to the higher replacement rate, while younger generations will be burdened with higher contributions through increased premiums.

This amendment to the National Pension Act is a mixed bag. Raising contribution rates is a positive step toward fiscal sustainability. However, increasing the income replacement rate will accelerate the depletion of the pension fund. By comparison, Japan’s employee pension system has a contribution rate of 18.3 percent and an income replacement rate of only 25 percent — indicating that the Japanese contribute significantly more while receiving less.

To ease the fiscal burden caused by a higher replacement rate, introducing an automatic balancing mechanism is essential. Japan implemented such a system two decades ago. Yet, the bipartisan agreement in Korea notably left it out. Lawmakers have pledged to discuss the issue in a forthcoming special parliamentary committee on pension reform, but whether any meaningful agreement will materialize remains uncertain.

Conservative People Power Party floor leader Kweon Seong-dong, left, National Assembly Speaker Woo Won-shik, center, and liberal Democratic Party floor leader Park Chan-dae hold documents listing agreed provisions for the national pension scheme at the National Assembly in western Seoul on March 20. [NEWS1]

The reform delays the projected depletion of the National Pension Fund from 2056 to 2064. In other words, for someone born in 1999, the fund will run dry by the time they reach retirement age at 65. What happens then? The government would either need to incur massive debt or drastically raise taxes. That’s the hidden cost behind the statement that “the government guarantees pension payouts.” Regardless of the method, the financial burden ultimately falls on young and future generations. It's no wonder the youth refuse to accept this looming fiscal disaster without protest.

Some presidential hopefuls have called on the government to veto the bill. One has to ask: where were they during the actual negotiations? If they opposed the bill, they should have voiced stronger objections during the talks, not after the fact. Their belated alignment with young voters’ frustrations comes across as political opportunism rather than principled leadership.

The members of the soon-to-be-formed special parliamentary committee on pension reform now face a daunting task: to correct the generational imbalance and build a sustainable pension system through structural reform. The PPP’s decision to appoint three lawmakers in their 30s — who joined the press conference — to the committee is commendable. In stark contrast, the DP appointed none of its three press conference participants. One cannot help but wonder if the DP leadership is punishing these lawmakers for defying party lines. That raises a serious question: Is the Democratic Party truly committed to pension reform that benefits the younger generation?

Translated using generative AI and edited by Korea JoongAng Daily staff.