[Defense Brief] It's Time to Decide on the Chronically Deficit-Ridden Military Pension

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During a meal with foreign military attach?s stationed in Korea, we discussed welfare for soldiers. It was the foreign attach? who brought up the topic. He repeatedly expressed envy for the Korean military. When asked why, he singled out the military pension. The foreign attach?s explained that, in their countries, they must make additional contributions until reaching the eligible age after discharge, and only then do they receive civil servant pensions. In contrast, Korean soldiers begin receiving their pension immediately upon discharge, and the amount is large. They praised the Korean military pension as an exceptional benefit not found in other countries' armed forces.

The Korean military pension is a public pension system established in 1960 to provide retirement and survivor pensions for military personnel. Alongside the civil servant pension and the private school pension, it is classified as one of the three major occupational pensions. The system is designed to institutionally compensate for the risks and sacrifices associated with military service, a special occupation. Its funding comes from state contributions, government subsidies, and the profits from fund management.

But do these foreign attach?s know that the military pension system suffers from a chronic deficit? Every administration has been aware of the problem, yet hesitated to address it due to concerns over votes. Meanwhile, the deficit has continued to grow each year. In the past ten years alone, the government has paid 58 trillion won in subsidies financed by taxpayer money to cover the civil servant pension fund’s fiscal shortfall. Of this amount, 17 trillion and 750 billion won was for the military pension.

The outlook is even more concerning. The payout rate relative to income is high, and the structure allows for pensions to be received immediately upon discharge. As life expectancy increases, the period during which pensions are paid lengthens, inevitably worsening the financial situation. It is projected that by 2065, government subsidies for the military pension will reach 11 trillion and 653 billion won, equivalent to 0.15% of the nation’s GDP. The accumulated deficit since the system’s inception is estimated to reach a staggering 637 trillion and 7.048 billion won.

Despite the chronic deficit, management remains poor. There have even been reports that, during the 12·3 Martial Law, there were attempts to use the military pension as martial law funds. It is said that, following former President Yoon Suk Yeol’s directive to secure “martial law funds,” internal funding sources were reviewed, and the military pension was considered as a potential target. The reason the instigators of martial law set their sights on the military pension was because its management agency is only an organization within the Ministry of National Defense, with little external oversight.

There are also cases where funds have been siphoned off. The Korea Military Mutual Aid Association is a public enterprise entrusted with managing military pension assets. Recently, allegations have surfaced that a portion of the proceeds has been diverted for 17 years. A subsidiary of the association was responsible for managing rental operations for three buildings in Sewoon Square, Jongno 4-ga, Seoul, which are owned by the Ministry of National Defense. Rental income is supposed to be deposited into the military pension fund. In reality, things were different. The subsidiary collected facility usage fees into separate accounts for itself. The owner, the Ministry of National Defense, was completely unaware that city gas facility usage fees had not been paid for 17 years, and mobile carrier relay station site usage fees had not been paid for six years.

If neither the political sector nor the government addresses the chronically deficit-ridden military pension, and management continues to be lax, the burden will ultimately fall on future generations. Within and outside the military, measures such as introducing a “pension peak” system that reduces pensions after age 80, strengthening re-employment opportunities after discharge, and adjusting the timing of pension payments have been proposed. If the economic downturn worsens, the more than 20 million subscribers to the National Pension could be the first to raise this issue. Before that happens, the military must confront the problem head-on and work with the public to find solutions.

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