Jeon Jin-sook: "Government Pension Reform Plan Increases Cut Rates for Younger Generations"

"Withdrawal of Automatic Deduction Device, Introduction of Care Credit"

Jeon Jin-sook Assembly Member

A comparison between the government's pension reform plan and the National Assembly's Public Deliberation Committee proposal estimated a maximum reduction of 61.8% in net benefits. It is expected to spark controversy as the reduction rate appears to be higher among younger generations.

According to data estimated by Democratic Party lawmaker Jeon Jin-sook (Gwangju Buk-gu Eul) in collaboration with the Public Pension Strengthening National Action, net benefits are reduced by 46% for those born in 1975 (age 50), 56.4% for those born in 1985 (age 40), 61.8% for those born in 1995 (age 30), and 61.1% for those born in 2000 (age 25).

The rate of return, defined as the ratio of total lifetime benefits to total lifetime insurance premiums, is also estimated to decrease from 2.6 times to 1.85 times for those born in 1975, from 2.37 times to 1.6 times for those born in 1985, from 2.2 times to 1.46 times for those born in 1995, and from 2.16 times to 1.46 times for those born in 2000.

A representative from the Public Pension Strengthening National Action stated, “The government's income replacement rate of 42% differs significantly from the citizens' deliberation proposal of 50%. The automatic reduction mechanism makes the elderly poorer as they age and cuts pensions more for younger generations, losing the essence of the system, which is to prevent elderly poverty.”

Lawmaker Jeon emphasized, “The Yoon Seok-yeol administration's pension reform plan focuses solely on fiscal stability, resulting in pension cuts. The automatic adjustment mechanism should be withdrawn to strengthen retirement income security, and the introduction of care credits to extend the contribution period should be actively considered as one of the measures to enhance income security.”

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