['Money-Eating Hippo' Public Pension] Military Pension Reform Remains Stagnant After 3 Years of Calls

National Assembly Defense Committee Orders Improvements to Military Pension in Settlement Report
Effectiveness Questioned Amid Repeated Annual Criticism

[Asia Economy Reporter Naju-seok] It has been repeatedly pointed out every year that the government's subsidy for military pensions could reach 10 trillion won by 2060 due to the increasing financial burden. Recently, the National Assembly requested the Ministry of National Defense to improve military pensions, but the same issues have been raised for several years. There are calls to enhance the effectiveness of the National Assembly's oversight function and to establish fundamental measures to improve the financial status of military pensions.

According to the National Defense Committee of the National Assembly on the 12th, the committee recently ordered the Ministry of National Defense to devise a plan to improve the operating yield of the military pension fund through a settlement correction request. The yield of military pensions is lower compared to six other social security funds, including the National Pension Service. In fact, while the Private School Teachers’ Pension Fund recorded an 11.95% return and the National Pension Service 10.86% last year, the military pension only achieved 2.93%.

Currently, military pensions are funded by soldiers contributing 7% of their basic monthly income and the government matching this with a 7% national burden contribution. The fund is managed using these contributions and investment returns. However, these costs cannot cover the expenses, so subsidies are provided annually. Last year, 1.6012 trillion won was injected as subsidies. According to the long-term financial outlook submitted by the Ministry of National Defense to the National Assembly Budget Office, the subsidy amount is expected to exceed 5.0368 trillion won by 2040 and reach 10.084 trillion won by 2060.

The problem is that although the financial burden of military pensions is pointed out every year, the possibility of improvement is low. The National Defense Committee has requested the Ministry of National Defense to prepare measures to address the increase in military pension subsidies over the past three years. The Ministry of National Defense has only reported that it is reviewing institutional improvements through research projects, without providing any significant progress.

The insurance premium rate for military pensions was raised from 5.5% to 7% through reforms in 2013, which is lower than the increase in the civil servant pension premium rate from 7% to 9% during the 2015 reform.

Democratic Party lawmaker Ahn Gyu-baek has requested the Ministry of National Defense to form a task force related to military pensions. In a phone interview with this publication, Rep. Ahn said, "There have been attempts to reform military pensions, but strong opposition made it difficult. Since the military pension deficit is large, it is necessary to discuss it this time."

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