The Most Controversial Pension Reform... Can the Ruling and Opposition Parties Reach a Last-Minute Agreement?

Meeting of Ruling and Opposition Floor Leaders on the 27th... Discussion on Income Replacement Rate
Lee Accepts 44%, Applying Full-Scale Pressure on Government and Ruling Party
Ruling Party Criticizes Discussion Without Structural Reform as 'Political Trick'

With only three days left in the 21st National Assembly, the National Pension reform has emerged as a key issue between the ruling and opposition parties. Lee Jae-myung, leader of the Democratic Party of Korea, has expressed a position to prioritize agreement on specific numerical reforms (parameters) such as the income replacement rate and contribution rate of the National Pension during this session. On the other hand, the ruling party insists that a national consensus must be established first for pension structural reform and accuses the Democratic Party of employing 'political tricks.'

According to political circles on the 27th, Park Chan-dae, floor leader of the Democratic Party, and Chu Kyung-ho, floor leader of the People Power Party, will meet at 11 a.m. under the chairmanship of the Speaker of the National Assembly to discuss pension reform.

The recent emergence of pension reform as a contentious issue stems from Lee’s remark last week that he could accept the ruling party’s proposed income replacement rate of 44%. The Democratic Party initially advocated for a contribution rate of 13% and an income replacement rate of 45%. The People Power Party proposed a contribution rate of 13% and an income replacement rate of 43%, but Yoo Kyung-joon, the ruling party’s secretary of the Special Committee on Pension Reform, suggested lowering the income replacement rate to 44%.

Lee Jae-myung, leader of the Democratic Party of Korea, is speaking at the Supreme Council meeting held at the National Assembly on the 27th. Photo by Kim Hyun-min kimhyun81@

The income replacement rate, which has become a contentious point in pension reform, refers to the ratio of the pension amount received relative to the average income during the pension subscription period. For example, if the income replacement rate is 50%, it means one can receive 50% of their average income as a pension. The Democratic Party argues that a 1 percentage point difference should not cause the pension reform to fail in the 21st National Assembly.

However, the ruling party drew a line, stating that the issue is not simply about a 1 percentage point difference. They emphasized that without preceding structural reforms, such as linking the National Pension with the Basic Pension, the reform could ultimately fail. Floor leader Chu said, "Let us form a consultative body involving the ruling party, opposition, and government to discuss pension reform, and reorganize the National Assembly’s Pension Special Committee in the 22nd National Assembly as well."

Political circles view the possibility of reaching an agreement on pension reform during the discussion between the two parties’ floor leaders on this day negatively. The ruling party claims that the opposition used pension reform as a pretext for comprehensive pressure to gain control of the political situation. The opposition also does not entirely hide such criticism. A Democratic Party official said, "Isn’t the Yoon Seok-yeol administration rejecting all compromises between the ruling and opposition parties, such as exercising the veto power on the Chae Sang-byeong Special Prosecutor Act?" and added, "The Yoon administration must urgently discuss matters directly related to people’s livelihoods, such as pension reform." Meanwhile, Speaker Kim Jin-pyo is keeping open the possibility of a plenary session on the 29th and is urging the ruling and opposition parties to reach an agreement.

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(Seoul=Yonhap News) Reporter Kim In-cheol = On the afternoon of the 25th, Lee Jae-myung, leader of the Democratic Party of Korea, Park Chan-dae, floor leader, and Cho Kuk, leader of the Innovation Party, shouted slogans at the nationwide rally held in front of Seoul Station to condemn the ruling party and civil society’s rejection of the Marine Corps Special Prosecutor Bill and to urge its passage. 2024.5.25 [Joint Coverage]
yatoya@yna.co.kr
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Some interpret the Democratic Party’s pressure as a strategic move to strengthen Lee Jae-myung’s reappointment prospects. They argue that by expanding the re-vote on the Chae Sang-byeong Special Prosecutor Act and discussions on pension reform, a long-term discussion centered on Lee should be led.

Professor Shin Yul of Myongji University’s Department of Political Science and Diplomacy told Asia Economy, "It appears that Lee is trying to exhaust the government and ruling party’s (political) power through livelihood-related issues," and added, "Issues like pension reform should be approached with time and jointly, considering problems such as the income gap during the period between retirement and receiving the National Pension."

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