(Chosun Ilbo) [Editorial] The Warning That “Without Reform, a ‘Pension Goryeojang’ at the Hands of the MZ Generation Is Possible” (June 9, 2022)

Financial outlook for the National Pension. /Graphic: Song Yun-hye

The new administration has presented pension reform, together with labor and education reform, as one of three priority tasks for overcoming the crisis.

The government plans to create a ‘Public Pension Reform Committee’ as a social grand-compromise body to deliberate on pension reform.

National Pension reform is urgent because the current system is structured so that people pay in little and take out a lot, and on top of that it has struck a major reef: low fertility and population aging.

The current system has kept the framework last revised in 2007 for 15 years now. Yet the number of births plunged from 497,000 in 2007 to 260,000 last year.

By contrast, the population aged 65 and over grew from 4.76 million in 2007 to 8.57 million at the end of last year.

The number of people who will pay contributions going forward has fallen by half, while the number who will receive pensions has nearly doubled. Unless the system is fixed, it can no longer be sustained.

Projections have already been made that if the National Pension is kept at its current level, it will turn to deficit in 2042 and the fund will be depleted around 2057.

Even these figures assume, optimistically, a total fertility rate of about 1.32 to 1.38. That is why successive administrations reformed the system to push back the projected date of fund depletion as far as possible, for example by delaying the age at which pensions are received or by reducing benefit amounts.

This was because, unpopular as all of these measures were, they had no choice but to take them.

Former President Moon Jae-in alone, however, turned away from pension reform throughout his five years in power.

When the National Pension System Development Committee and the Ministry of Health and Welfare reported reform proposals, he kicked them aside and even went so far as to persecute ministry officials.

Nor did he touch the Government Employees Pension, the Military Pension, or the Private School Teachers Pension, which receive trillions of won from the national treasury every year. In doing so, he left the younger generation with a correspondingly heavier burden.

In an interview with this newspaper published on the 6th, Yun Suk-myung, a Research Fellow at the Korea Institute for Health and Social Affairs (KIHASA),

said, “If the current generation does not reform pensions properly, there is also a possibility that the MZ generation, which took no part in the decision-making, will grow up and carry out a ‘pension Goryeojang,’ cutting off pension payments to the older generation.”

There is in fact a precedent: Greece drastically cut pension amounts following its fiscal collapse in 2008.

Who can guarantee that such a thing will never happen in Korea, the country hit hardest in the world by low fertility and population aging?

Discussion of pension reform must begin, and a reform plan must be passed in this year’s regular session of the National Assembly.

The Chosun Ilbo

https://n.news.naver.com/article/023/0003696411?sid=110