[Open World] A Word of Candid Advice on a Solution to the Basic Pension / Yoon Seok-myeong, Director of the Pension Research Center, Korea Institute for Health and Social Affairs (February 14, 2014)

(In 2013,

when the debate over the introduction of the Basic Pension had reached its political peak, the following constituted a word of candid advice on a solution to the Basic Pension.

At that time, the Seoul Sinmun urged the political establishment through an editorial to heed the advice put forward in this column.

Had the political establishment of the day followed that advice, the current intractable predicament known as the Basic Pension — an entirely absurd state of affairs — would never have come to pass.

It will become evident in time that the ongoing debate over structural reform of the National Pension — including the introduction of an automatic adjustment mechanism — has its origins in virtually the same set of concerns that informed the search for a Basic Pension solution.

Those pension specialists of the day who actively championed the introduction of this monstrous Basic Pension system

would do well, as the minimum courtesy owed in exchange for the title of "expert" they have long claimed, to now acknowledge their errors.)

 

In Korean society, the Basic Pension is a hot-button issue. This has been the case ever since the Grand National Party, having concluded that pension matters exerted a significant influence on the 2002 presidential election, adopted the Organisation for Economic Co-operation and Development's (OECD) recommendations on a basic pension.

The pattern that has unfolded since then has been consistent. The government, mindful of financing and the burden on future generations, favors a selective scheme, while the opposition prefers a universal Basic Pension on account of its broader electoral appeal.

In the early years of the Roh Moo-hyun administration, the Basic Pension issue gave rise to heated disputes. After more than a year of controversy, the conclusion was that a universal Basic Pension was not feasible.

The Lee Myung-bak administration, which had campaigned on a Basic Pension pledge similar to that of the Park Geun-hye administration, likewise deferred the introduction of the Basic Pension after six months of debate — despite its inclusion among the administration's 100 national policy priorities.

The Basic Pension debate triggered by the 18th presidential election has served only to deepen the conflict further.

A survey of public awareness regarding the Basic Pension conducted by the Korea Institute for Health and Social Affairs (KIHASA) and released immediately prior to a scheduled tripartite consultative meeting among the ruling party, the opposition, and the government only heightened the controversy. It is regrettable that the survey was published without including questions on the linkage clause — the central issue at stake.

(omitted)

The following requests are addressed to the tripartite consultative body:

In a context of low fertility (1.18 in 2013), the discussion should concentrate on identifying measures that can provide adequate support for the large number of elderly persons exposed to poverty without imposing an excessive burden on future generations.

The ruling government party is urged to reconsider from the ground up the linkage scheme between the National Pension and the Basic Pension — which has attracted no small degree of criticism — while the opposition is encouraged to give favorable consideration to the effectiveness of the differentiated benefit structure proposed by the ruling party.

As an alternative, the author proposes that, in lieu of linking the National Pension and the Basic Pension, the 70% coverage provision be deleted from the principal act.

As with the current Basic Old-Age Pension, it is possible to pay the Basic Pension to 70% of the elderly population even without a 70% coverage provision in the principal act.

Elderly citizens who have made great contributions to the nation's industrial development are likely to be more concerned with who receives the Basic Pension and in what amount than with a statutory 70% provision.

Consideration should be given to raising benefit amounts in a differentiated manner while paying 200,000 won or more to elderly persons in absolute poverty — an approach that would help to alleviate the high rate of elderly poverty.

Should it be deemed necessary to include a 70% coverage provision in the Basic Pension Act, the author recommends placing it in implementing ordinances or regulations rather than in the principal act, so as to allow for flexible administration of the scheme.

Even the OECD, which first recommended a universal tax-financed basic pension and thereby provided the initial impetus for the Basic Pension debate, had already revised its recommendations in 2012 in favor of a selective, differentiated payment approach.

This is because, while the effect of alleviating elderly poverty is limited, a rapid escalation in costs is inevitable as the elderly population grows.

This is the candid advice (苦言) of the author, who has observed the Basic Pension debate for more than ten years.

The tripartite consultative body of ruling party, opposition, and government is urged to confine its decisions to the matter of alleviating the high rate of poverty among the current elderly generation.

The author's earnest request is that no decisions be made that will constitute a lasting burden on future generations.

Rather than adopting a partisan approach calibrated to local elections, the deliberative body is urged to devote its full attention to minimizing the burden transferred to future generations and to developing measures that will alleviate the high rate of elderly poverty.

https://n.news.naver.com/article/081/0002399451?sid=110