"Let's Revise Military Pensions Now" Last Year's Deficit of 1.5799 Trillion Won... Government to Cover Losses

National Assembly Budget Office: "Military Pension System Reform Measures Must Be Thoroughly Examined"

[Asia Economy Reporter Naju-seok] Ahead of next year's presidential election, discussions on public pension reform are underway, and the need for military pension reform has been raised. Military pensions, which are a blind spot in public pension reform, also require improvement considering the financial burden and the redesign of the military personnel structure, where the number of career soldiers is increasing according to national defense plans.

According to the 2020 fiscal year settlement analysis by the National Assembly Budget Office on the 12th, 1.5779 trillion won was invested last year to cover the deficit of military pensions. Looking at the settlement status of military pension revenue items last year, military pension's own income was 702.5 billion won (20.1%), and the national burden was 1.2046 trillion won (34.6%). The remaining 45.3% was supported in the form of subsidies. Nearly half of the military pension is covered by government subsidies.

Military pensions require career soldiers to contribute personal contributions and the property income of the military pension fund, in addition to the national burden. However, if these two alone are insufficient to cover the payment amount, the government supports by providing subsidies. Accordingly, government subsidies have been injected into military pensions since 1973.

Previously, military pension reform was insufficient even during the 2013 civil servant pension reform. At that time, civil servant pension reform increased the insurance premiums paid by civil servants and reduced the benefits they would receive later, whereas military pensions were revised by only increasing premiums while maintaining benefits. Moreover, the military pension contribution rate is about 7%, which is lower than the civil servant pension reform target of 9%. As a result, civil servant pension subsidies have decreased, while military pension subsidies have increased annually.

The problem is that the financial burden is increasing. According to estimates by the Ministry of Economy and Finance, military pensions will require 3.1677 trillion won to cover deficits in 2030, increasing to 10.084 trillion won by 2060. Furthermore, if the military personnel structure increases due to defense reform, such as an increase in non-commissioned officers, the number of career soldiers will rise, and the scale of military pension deficits may increase in the mid to long term.

In this regard, military pension reform is expected to come to the surface. Last year, during the settlement review, the National Assembly demanded measures to address the increase in military pension fund subsidies, and the Ministry of National Defense plans to submit related research services in October this year.

The Budget Office stated, "Based on the results of the research service, it is necessary to improve the issue of increasing military pension subsidies by enhancing the investment yield of military pension reserves in the short term and promoting discussions on military pension system reform in the mid to long term." It added, "In the process, various proposed military pension reform measures, such as setting appropriate contribution rates and benefit payment rates, adjusting the starting age for benefits, and adjusting rank retirement ages, should be carefully reviewed."

Presidential candidates and others are also raising the issue of military pensions. Yoon Hee-sook, a member of the People Power Party, has announced reforms for public pensions overall, including military pensions.

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