"Multiple Pension Reform Plans Prepared"... Attempted Negotiation During Europe Business Trip

Discussing Compromise on Income Security and Fiscal Stability
Government Officials to Join European Business Trip for Discussions
Determined to Initiate Pension Reform in 21st National Assembly

Significant progress has been made within the National Assembly's Special Committee on Pension Reform regarding the reform of the National Pension Service. Committee officials plan to engage in decisive negotiations on key issues during a business trip to Europe. Although the possibility of reaching a pension reform agreement, once considered a difficult challenge, has increased, whether it will be accepted is likely to become the biggest issue for the 21st National Assembly with less than a month remaining.

According to the Special Committee on Pension Reform on the 7th, a compromise plan is being discussed between the income guarantee proposal (raising the contribution rate from 9% to 13% and the income replacement rate from 40% to 50%) and the financial stability proposal (raising the contribution rate from 9% to 12% while maintaining the income replacement rate at 40%) that was debated by the committee's public opinion committee. A committee official said, "Although both ruling and opposition parties have claims pushing for the maximum levels, under the judgment that it is realistically difficult, multiple alternatives reflecting both income guarantee and financial stability claims have been prepared," adding, "There has been a convergence of opinions." The official also stated, "A substantial parameter reform plan has been prepared, and since there are dozens of parts that need adjustment depending on changes to the contribution rate and income replacement rate, we plan to discuss these during the business trip."

On the 30th, at the plenary meeting of the Special Committee on Pension Reform held at the National Assembly, Chairman Joo Ho-young is speaking. Photo by Hyunmin Kim kimhyun81@

In this regard, Joo Ho-young, chairman of the Special Committee from the People Power Party, along with Yoo Kyung-joon of the People Power Party and Kim Sung-joo of the Democratic Party of Korea, who serve as the ruling and opposition party secretaries, will visit the United Kingdom and Sweden from the 8th for a 5-night, 7-day schedule. Uniquely, this trip will also include domestic pension reform experts, such as Kim Yong-ha and Kim Yeon-myeong, co-chairs of the private advisory committee who discussed pension reform plans, as well as government officials including the senior expert of the National Assembly's Health and Welfare Committee and Lee Ki-il, the first vice minister of the Ministry of Health and Welfare.

As the term nears its end and the possibility of reaching an agreement remains uncertain, the committee's choice to undertake an overseas business trip has drawn sharp criticism from public opinion. Yang Hyang-ja, floor leader of the Reform New Party, criticized at the party's supreme council meeting that day, "Considering the urgency and importance of pension reform, shouldn't unlimited meetings between ruling and opposition committee members be held instead of going on a European trip?" A committee official responded, "There was never a plan to keep the trip confidential. We intended to disclose the negotiation status so far and then finish the discussions intensively during the trip," adding, "Initially, if there was no possibility of agreement, we thought we would only receive criticism and decided not to go. The fact that we decided to go means there is a will to reach an agreement." The committee explained that the participation of government officials is to reflect the government's position on financial requirements related to the agreement.

The decision to undertake the overseas business trip reflects a desperate measure to create an environment conducive to reaching an agreement. It aims to limit contact with domestic and foreign stakeholders to some extent to focus on negotiations. Those involved in the trip are reportedly pledging not to engage with the media regarding negotiation details during the trip. One official said, "If media reports come out, they will likely cover only partial information rather than the whole, which could cause unnecessary misunderstandings and controversies, so we will not disclose the agreement to the media until the final conclusion is reached."

Given the strong will within the committee to reach an agreement, the key issue going forward will likely be whether the political circles and others will accept it. Acceptance by the political sphere is another matter. While the willingness of President Yoon Seok-youl and Democratic Party leader Lee Jae-myung to pursue pension reform, expressed through summit talks, is viewed positively, voices opposing the existing negotiation direction have emerged, especially from the ruling party, citing alternatives such as the Korea Development Institute (KDI)'s new pension reform (proposed by Na Kyung-won) or the Swedish-style defined contribution plan (proposed by Ahn Cheol-soo).

Representative Kim Sung-joo said, "The Special Committee on Pension Reform has led pension reform in a bipartisan manner, but at the final stage, claiming that various aspects are insufficient and that structural reform is necessary can only be seen as obstructing the agreement," adding, "Parameter reforms (adjustments to contribution rates or income replacement rates) have not been done for 17 years, so accepting scholars' idealistic claims is not a responsible attitude." He continued, "If we only say we want to create an ideal system, nothing can be done," and "We need to create a feasible system now. This pension reform should be the first step, followed by parameter reforms and then discussions on structural reforms."

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