[Initial Insight] Pension Reform Must Be Completed by the 21st National Assembly

Black Comedy in Pension Reform Discussions
Putting a Bell on a Cat's Neck to Avoid Responsibility
Must Take Responsibility and Handle It in the 21st National Assembly

Pension reform has garnered broad consensus on the need for change, even if President Yoon Seok-yeol did not explicitly mention the 'three major reforms.' Warnings that the National Pension Fund will be depleted by 2055 have been sounded multiple times. The ‘contribution rate,’ which refers to how much is paid into the National Pension, and the ‘income replacement rate,’ which indicates how much pension one can receive after retirement, have attracted significant attention whenever figures were presented by the government, the National Assembly, or government-affiliated research organizations. Younger generations have grown increasingly skeptical about whether they will actually receive the National Pension in the future, while middle-aged and older generations have been closely watching how much their paychecks might shrink due to contribution rate hikes.

Although the president and political circles have all called for the necessity of reform, actual discussions have been sluggish. The National Assembly’s Special Committee on Pension Reform, which convened on the 16th, laid bare the current state of pension reform. The committee criticized the final report, which consolidated the work of the private advisory committee under the special committee, and the government’s ‘5th Comprehensive National Pension Operation Plan Report,’ calling it a "watered-down reform" and questioning "what has been done so far."

Looking back on the discussions so far, the pension reform process has resembled a black comedy. The special committee asked the advisory committee to draft pension reform proposals to hear experts’ opinions. When specific figures regarding contribution rates and income replacement rates emerged from the advisory committee, the political circles suddenly pressured the advisory committee to prioritize structural reform over parametric reform. They demanded resetting the relationships among the National Pension, Basic Pension, and Retirement Pension, and preparing reform plans for occupational pensions such as the civil servant pension, rather than raising the National Pension contribution rate, which is a parametric reform.

The government has been no different. The National Pension Financial Calculation Committee, a government advisory body expected to present concrete directions for parametric reform, failed to finalize the government’s pension reform plan and was criticized for producing a watered-down reform by covering 24 different scenarios.

At this point, the parliamentary advisory committee, which was preparing structural reform plans, summarized two parametric reform options and reported them. Although this report was formally submitted to the National Assembly, it was issued solely under the names of the joint chairpersons of the advisory committee, Kim Yeon-myeong and Kim Yong-ha. As pension reform discussions faltered, it appears that these two scholars, who have devoted their lives to studying pension reform, took the initiative.

The reason pension reform has reached this state is due to the political circles’ cowardice. Politicians feared the repercussions that pension reform issues might bring, and the government refused to present the public with a tangible blueprint for pension reform. Ultimately, only when the private advisory committee chairperson took the lead was a minimal framework for pushing pension reform established. However, doubts remain whether the National Assembly, with the general election five months away, can complete the pension reform task.

The political circles are planning to refine the pension reform plan before next year’s general election, conduct a public opinion survey, and then attempt final approval in the National Assembly during the roughly one month after the election. If this opportunity is missed, the 22nd National Assembly will be formed, and newly elected lawmakers will study pensions and repeat the discussions that have already taken place. If another special committee is formed, political conflicts will arise again over the issue of ‘putting a bell on the cat’s neck.’ Meanwhile, the current government’s term will move into its latter half, and next presidential candidates will raise demands for pension reform. Thus, reform will be passed on as a task for the next administration, and the future of the National Pension will become even more bleak. The opportunity to break this vicious cycle is now. Pension reform must be completed in the 21st National Assembly.

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