[2022 National Audit] Do Young Generations Pay More and Receive Less Pension?..."The Importance of the State's Role"

Kim Taehyun, Director of the National Pension Service, "The State Must Provide Assurance That It Can Take Responsibility for Future Pensions"

Kim Tae-hyun, Director of the National Pension Service Photo by Yonhap News

Kim Tae-hyun, the Commissioner of the National Pension Service, expressed his view on the government's pension reform agenda, stating that it is most important to provide assurance that the state can take responsibility for future pensions so that the younger generation, who have many concerns about "not receiving as much as they pay," can be confident in the sustainability of the system.

At the National Assembly Health and Welfare Committee's audit on the 11th, Commissioner Kim responded to Rep. Shin Hyun-young of the Democratic Party's criticism, along with Minister of Health and Welfare Cho Kyu-hong, regarding the severe disparity in pension benefits received by the younger generation. Rep. Shin pointed out that if the pension reform raises contribution rates, the younger generation would bear higher insurance premiums than the older generation but still might not be able to secure their retirement through public pensions.

Rep. Shin gave an example comparing Minister Cho, born in 1967 and receiving a monthly pension of 3.44 million KRW from age 51 under the government employee pension scheme, with the younger generation born in 2000, who would receive only 1.24 million KRW monthly from age 65 even after paying the maximum National Pension contributions for 30 years. Assuming pension receipt until the Korean average life expectancy of 85 years, Minister Cho would receive about 1.4 billion KRW, while the younger generation would receive only 290 million KRW. The older generation born in 1967 receiving the National Pension would receive about 510 million KRW over the same period, showing a significant gap with the younger generation.

Concerns were also raised that increasing contribution rates could lead to stronger resistance from employers. In response, Commissioner Kim gave a fundamental answer, saying, "Regional subscribers also bear burdens, and employers have burdens as well," adding, "It is important to reach a social consensus where stakeholders make small concessions to ensure sustainability."

He emphasized that the direction of pension reform should not only focus on fiscal soundness but also on strengthening retirement income security. When asked whether the government's pension reform should be understood as a "pay more, receive less" approach, Commissioner Kim replied, "It should be done considering generational equity under the premise of strengthening retirement income security while ensuring fiscal soundness." This suggests an approach closer to "pay more, receive more." In this regard, Minister Cho also stated in a written response sent to the National Assembly before last month's confirmation hearing that he would consider formalizing the guarantee of pension payments. Commissioner Kim announced plans to complete the fiscal calculations by March next year and submit a comprehensive operational plan by October to advance pension reform discussions.

Commissioner Kim expressed support for expanding the "National Pension Childbirth Credit" system. The childbirth credit system, introduced on January 1, 2008, grants additional credited periods to the pension subscription period for those who have or adopt a second or subsequent child by the time they receive the National Pension. Recently, there have been calls to extend the benefits to first-born children due to declining birth rates.

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