[2020 National Audit] "Form the National Assembly Public Pension Reform Special Committee to Discuss 국민연금 Reform"

Nam In-soon "Refer to Public Pension Reforms in the UK, Canada, and Germany... Need to Prepare a Consensus Proposal"

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] As discussions on National Pension reform following the 4th financial recalculation of the National Pension have effectively stalled after being conducted by the Public Pension Reform Special Committee of the Economic, Social and Labor Council, calls have been made for the National Assembly to take up the reform discussions.

Nam In-soon, a member of the National Assembly’s Health and Welfare Committee from the Democratic Party of Korea, stated, "The government announced four pension reform plans, and the Public Pension Reform Special Committee of the Economic, Social and Labor Council submitted the results of discussions on key issues such as raising the National Pension income replacement rate, increasing insurance premiums, and raising the basic pension to the National Assembly in August 2019. However, even after a year, no discussions have taken place at the National Assembly level. Although somewhat delayed, a Public Pension Reform Special Committee should be formed within the National Assembly to actively advance National Pension reform discussions at the parliamentary level."

The 4th financial recalculation in 2018 projected that the National Pension Fund would be depleted by 2057. According to an analysis applying the National Assembly Budget Office’s latest future population projections, the National Pension is expected to shift to a deficit of 16.1 trillion KRW in 2040, and the deficit is projected to increase to 163.9 trillion KRW by 2054, 14 years later, making reform discussions urgent.

Nam said, "The UK unified its previously dual public pension system, consisting of the Basic State Pension (BSP) and the State Second Pension (S2P), into a new single National Pension starting in April 2016, and adjusted the contribution period from 30 to 35 years. Canada, from 2019 to 2023, gradually raised the income replacement rate from 25% to about 33.3%, and increased the insurance premium rate from 9.9% to 11.9%, thereby raising both the benefit level of the public pension and the insurance premium rate required for it."

He continued, "Germany announced the introduction of a minimum pension in November 2019 and decided to implement it from 2021. For low-pension recipients with at least 35 years of statutory pension insurance contribution history, the government provides up to €404.86 per month through government subsidies funded by general taxes such as a newly introduced financial transaction tax, thereby actualizing the state’s responsibility for preventing old-age poverty and ensuring livelihood stability for pension recipients."

Nam emphasized, "South Korea must continue reform discussions so that the National Pension functions as a core public old-age income security system. At the National Assembly level, various alternatives should be reviewed based on the government’s reform plans and the Economic, Social and Labor Council’s discussion results, and a sustainable social consensus should be established through the convergence of stakeholders’ interests."

This content was produced with the assistance of AI translation services.