"Though It May Seem Foolish"...Yoo Seung-min Draws the Sword for 국민연금 Reform

National Pension Reform Requires Retirement Age Extension, Premium Increase, and Benefit Period Reduction
"A Reform That Must Be Done, Doing It Is Normal"
Major Social Reform Agendas Including Labor Reform to Be Announced

[Asia Economy Reporter Naju-seok] Yoo Seung-min, a former lawmaker and presidential candidate of the People Power Party, recently announced a reform plan for the National Pension Service. At the time, Yoo described this pledge as the "result of deep anguish." When announcing the pledge, he even revealed a solemn sentiment, saying, "It may seem foolish, but I thought of politics as a calling."

Why did he fall into such deep contemplation while announcing the National Pension pledge?

Former lawmaker Yoo Seung-min. Photo by Dongju Yoon doso7@

In 2015, the political circle reached an agreement on the 'Public Officials Pension Reform.' Then-President Park Geun-hye boasted about the achievement during a policy speech at the National Assembly that year, stating, "We have secured 185 trillion won in taxes over the next 30 years." Depending on perspective, the public officials pension reform is considered one of the greatest achievements of the Park Geun-hye administration. The reason for this evaluation is that the process was by no means smooth.

In modern society, pension reform generally involves increasing the insurance premiums currently paid and reducing the pension benefits received in the future. If a retroactive clause is included in the reform plan, even retirees already receiving pensions would get less. Essentially, pension reform means paying more but receiving less money back. Because of this, whenever pension reform is discussed, fierce resistance from stakeholders is inevitable. Especially, pension reform targeting the entire population is a bombshell issue that can trigger generational conflicts. Yoo, who was the ruling party floor leader at the time, directly led this public officials pension reform and experienced conflicts of interest firsthand. Knowing the magnitude of the difficulties better than anyone, he has now promised reform of the National Pension Service.

Through social media (SNS), he said, "There were opposing opinions questioning whether a candidate running for president, who needs votes, should release such an unpopular pledge when others are making sweet promises to give everything away," adding, "But I thought we must at least prevent our youth from paying money and later not receiving pensions." Yoo stated, "Due to the skyrocketing housing prices, young people have given up on owning a home and tried investing in coins and stocks, but even these options are difficult. I think it is truly unacceptable that these young people, who are diligently paying into the National Pension from their monthly salaries, will not be able to receive it later."

In a phone interview with this publication, Yoo candidly explained the reason he brought up National Pension reform: "I think it is normal to do what must be done." Because it is something that must be done, he intends to do it.

However, National Pension reform cannot be resolved by righteousness alone. In the call, he introduced a rough direction for reform. Yoo said, "It is difficult to reduce the pension benefits," adding, "Currently, the National Pension's income replacement rate (the ratio of pension benefits to average income during employment) will only reach 40% in 2028. If it falls below 40%, people's old age will become unstable." The 40% income replacement rate is, for now, the minimum defense line for National Pension benefits. Considering issues such as the elderly falling into poverty in our society, it is difficult to reduce pension benefits, even if increasing them is not possible.

Ultimately, the way to achieve this is either to raise insurance premiums or shorten the payment period. Regarding this, he said, "It is necessary to extend the retirement age, have people in their early 60s work longer, delay the start of National Pension benefits, raise (National Pension) insurance premiums, or inject taxes in advance." This means adjusting the retirement age to work longer, delaying the earliest age to receive pensions considering aging, increasing premiums, or saving taxes that would be used elsewhere to pre-fund the National Pension. None of these reform directions are easy.

Former lawmaker Yoo Seung-min. Photo by Dongju Yoon doso7@

Yoo said, "(This process is) 'painful,'" but added, "Ultimately, this is a problem for our sons and daughters." He explained, "We have no choice but to persuade the public by emphasizing that this is a problem concerning their own children." He intends to persuade the public not only by considering the insurance premiums they currently bear but also the burdens their children will have to shoulder. He continued, "Promising painful reforms at the pledge stage is to express the determination to definitely carry them out," and added, "If you make a pledge that does not help with votes but do not fulfill it after coming to power, wouldn't that be foolish?" Having made it a pledge with great difficulty, he is determined to complete the reform.

A former lawmaker close to Yoo said, "We can no longer guarantee the future by just leaving the situation, which is as clear as fire in the eyes, unattended and passing the responsibility around like a hot potato," and explained, "Politicians cannot ignore public votes, but the future of the Republic of Korea cannot be guaranteed by only sweet words. It seems the National Pension reform agenda came out from the concern that we must take the right path."

He plans to announce labor reform as a pledge soon.

Yoo promised, "I will announce labor reform that requires concessions from both companies and labor unions," and pledged, "The next government will properly prepare for the future." He pointed out, "The biggest problem in our labor market is the dual structure with large disparities," highlighting, "There are large gaps between large companies and small and medium enterprises, regular and non-regular workers, and union members and non-members." To solve this problem, Yoo said, "We need to strengthen social safety nets while increasing labor flexibility (making dismissals somewhat easier)," adding, "For this, reforms requiring concessions on core interests from both labor and management are necessary." He has long advocated for a social grand bargain among labor, management, and government.

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