"Gradual Transition of National Pension Management Method from Pay-As-You-Go to Funded System"

Consideration of the Integration of National Pension and Basic Pension

Yu Eui-dong, the Policy Committee Chairman of the People Power Party, announced on the 31st that he will push for a transition of the National Pension from a pay-as-you-go system to a funded system so that future generations will not have to rely on it. He also stated that the integration of the National Pension and the Basic Pension will be pursued.

At the party floor strategy meeting held at the National Assembly on the same day, Chairman Yu revealed the pension structural reform plan. He first said, "We will shift the pension management method," adding, "Currently, the pay-as-you-go system involves premiums paid by the younger generation being used to pay benefits to the elderly. We will gradually transition to a funded system where each generation does not rely on future generations." Chairman Yu explained, "For intergenerational equity, the current system will be applied to those enrolled before the pension reform, and a new system will be applied to those enrolled after the amendment."

Yoon Jae-ok, floor leader of the People Power Party, is speaking at the floor countermeasure meeting held at the National Assembly on the 31st. Photo by Kim Hyun-min kimhyun81@

He also stated, "We will pursue the gradual integration of the National Pension and the Basic Pension system." Chairman Yu said, "It is necessary to link the Basic Pension, which guarantees a certain level of income to all elderly citizens, with the National Pension reform," and added, "The People Power Party will thoroughly review sustainable reforms rather than patchwork reforms and will boldly push them forward." He promised, "We will present the optimal alternative after sufficient discussions, free from political logic."

Chairman Yu emphasized that, in addition to parameter reforms focused on the National Pension contribution rate and income replacement rate, separate structural reforms are necessary. He said, "The government's National Pension reform plan is scheduled to be submitted to the National Assembly today," and added, "So far, pension reform discussions have focused on parameter reforms adjusting the contribution rate and income replacement rate." He continued, "Parameter reforms only delay the depletion schedule of the fund and are half-measures," explaining, "Considering the rapid low birthrate and aging population in our country's demographic structure, structural reforms that change the framework are necessary for pension sustainability."

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