[Inside Chodong] Pension Reform: It's Not Over Until It's Over

This time, it seemed different, but once again, it was the same. The pension reform, which has failed to find a solution for 17 years, is on the brink of failure again in the 21st National Assembly. Joo Ho-young, the chairman of the National Assembly's Special Committee on Pension Reform from the People Power Party, said, "We are practically coming to the end of the 21st Assembly's activities." Unless the ruling and opposition parties reopen the door to dialogue and come together again, efforts to secure even a little sustainability for the National Pension will be at risk of collapse.

Unless the structure itself is changed, pension reform ultimately means either forcing people to allocate more of their salary to the National Pension or reducing the pension benefits received in old age. How could this task, which requires sacrifices from someone, ever be easy? Nevertheless, when the general election ended, the most urgent task to be resolved in the remaining month and a half of the National Assembly was pension reform. Although the 21st National Assembly was called the worst, there was a reason to believe that if pension reform was achieved, it could end on a high note. The Pension Special Committee also made efforts, spending billions of won of taxpayers' money on public opinion surveys during the remaining term after avoiding the general election schedule to gain momentum for pension reform. Concrete reform plans were discussed through the first and second phases of the private advisory committee, and the government conducted review work on various scenarios in the '5th National Pension Financial Projection,' although it did not present a conclusion.

The political situation was not bad either. Chairman Joo showed his commitment to reform by holding onto the special committee chairmanship even while serving as the party's emergency committee chairman and floor leader. Ruling party floor leader Yoo Kyung-joon, a former Korea Development Institute (KDI) expert, has deep knowledge of the pension system, and Democratic Party lawmaker Kim Sung-joo, who served as the chairman of the National Pension Service, is one of the most knowledgeable active politicians on pensions. It was not necessarily a bad sign that both party floor leaders lost their seats, as some feared. They might have a sense of mission to leave a political legacy as they leave the National Assembly. The president raised pension reform as one of the three major reform tasks, and the opposition party was also responding positively to discussions on pension reform. Could there be a better situation than this?

However, no agreement announcement was made. The ruling and opposition parties failed to narrow their differences over whether to raise the contribution rate (the amount paid) from the current 9% to 13% and set the income replacement rate (the amount received) at 43% or 45%. Any agreement would have extended the pension depletion point by at least 8 to 9 years and reduced the cumulative deficit from 2,766 trillion won (at 45% income replacement rate) to 4,318 trillion won (at 43%). But due to this 2 percentage point difference, the agreement collapsed, and the ball is set to roll over to the 22nd National Assembly.

Moving to the 22nd National Assembly does not simply mean a delay of a few months in the reform schedule. The National Assembly will have to reorganize the Pension Special Committee, but this can only be considered after the current territorial disputes over standing committees and other matters stabilize. Even if the Pension Special Committee is formed in late autumn, new lawmakers will need to be educated on various concepts of the pension system. By the time they grasp these concepts, an election year will begin: the 2026 local elections, the 2027 presidential election, and the 2028 general election. At that point, the challenge of pension reform will grow larger, and the cost will inevitably increase.

No matter how you think about it, if reform does not happen now, it will be difficult to find a time when pension reform can narrow the gap this much again. The later the reform, the louder the warnings about pension depletion will become, the financial burden will increase, and public trust in pensions and retirement life will weaken. We earnestly appeal to both the ruling and opposition parties: "It’s not over until it’s over. Please get back on the negotiation stage!"

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