A quasi-governmental panel tasked with discussing pension reform said Tuesday that it adopted a plan to increase insurance premiums as the majority opinion. But it stopped short of specifying how high the rises will be and when the change will be implemented.
Nothing shows the dilemma facing policymakers better than this public release. Officials believe premium hikes are the only way of ensuring the sustainability of the national pension system but can hardly muster up the nerves to ask people to ``pay more and receive less” ― yet again.
This means the government has some more, and more urgent, tasks to tackle before turning toward the last resort: the taxpayers.
Above all, the government’s move to raise premiums is somewhat hasty because the pension fund is unlikely to dry up until 2060 according to interim estimates made in March, indicating that Seoul has 47 more years. The accumulated reserve of 400 trillion won ($351 billion), or 32 percent of GDP, is already one of the highest levels in the world.
Moreover, the national pension has long fallen to ``pocket money pension” even before Koreans began to properly enjoy its benefits, as its ultimate payouts have fallen from 70 percent of pay to 60 percent in 1998 and further to 40 percent in 2007, while the pensionable age will gradually go up from 60 now to 65 by 2033. It is little surprise then that some civic groups have launched anti-national pension drive.
The biggest problem in pushing for premium hikes is the utter imbalance between separate pension schemes for government employees, career soldiers and teachers. These ``special” pension systems have long gone bankrupt, as they paid up to three or four times higher pensions than the national pension, and filled the gap with taxpayer money. Ordinary people want to know how long they must continue to squeeze their belts for these ``aristocratic pensioners” of former public servants and military officers?
There were times when people associated low pay with these public employees but those days have long passed. Reduced overtime, age limit security and sharply increased pays have pushed up these occupations to high on list of college graduates’ job preferences. It’s time for policymakers to consider either forcibly reducing the pensions of these public employees or integrating them into the national pension, or both. The proposed premium hikes ― from the current 9 percent of income to 13-14 percent ― without taking steps to ensure more equity among different pension systems will likely face enormous waves of popular protest.
No less important is how to maximize the pension’s function for income redistribution. The government should move in this regard toward helping those in the low-income brackets pay insurance premiums while raising the payment ceiling for high-income people. Also desirable is the increase of basic pensions for the neediest class through tax increases on the rich while scaling down the share of income-based national pension which can’t avoid leaving lots of loopholes amid an overall shortage of decent jobs.
In any pension reform so far, college professors have put forth basic ideas, bureaucrats turned them into draft bills, and politicians made them laws. Why should Koreans leave the national pension to people who have nothing to with do it personally?
It’s time for the nation to run a social dialogue forum on pension reform, led ― at least attended ― by ordinary pensioners.