Pension Future Forum: “To Ensure Sustainability, the National Pension Contribution Rate Should Be Raised to 15%”

Backlash Against Pension Reform Proposals from the National Assembly Special Committee on Pension Reform's Public Deliberation Committee… “Doubts About the Advisory Group's Fairness”
“If the Contribution Rate Is Raised to 15%, the Cumulative Deficit Would Shrink by 3,700 Trillion Won”

Pension researchers from the “fiscal-stability camp” raised an objection to the two reform proposals put forward by the National Assembly Special Committee on Pension Reform (the Pension Committee)'s Public Deliberation Committee, saying, “the option preferred by most experts was excluded”.

They said, “the Public Deliberation Committee's advisory group was made up mainly of members who had long argued for 'strengthening income security,' while experts focused on 'sustainability' were excluded,” questioning the fairness of the advisory group.

The Pension Future Forum claimed that in the Pension Committee's first-round vote, 10 of its 15 advisory committee members preferred the option with a 40% income replacement rate and a 15% contribution rate.

The Forum pointed out, “given that this option had the support of most pension experts and was the option most effective for fiscal stability, we question whether the agenda-deliberation panel's agenda-setting rules were fair, and whether this was not a 'tilted playing field'”.

They said, “when the Public Deliberation Committee's advisory group was formed, social-welfare scholars who had argued for strengthening income security were brought in, while experts who held a fiscal-sustainability perspective on the Financial Estimation Committee and the Pension Committee were excluded,” and demanded, “disclose what principles and procedures were used to form the advisory group's membership”.

They went on to state, “the two reform proposals currently put forward by the Public Deliberation Committee only delay the fund's depletion by a mere seven to eight years, so it is doubtful whether they can even be called a 'reform,'” and argue, “the option preferred by experts — a 40% income replacement rate and a 15% contribution rate — should be added so that the citizen representatives can study it”.

According to the Pension Future Forum, if Option 1 proposed by the Public Deliberation Committee (a 50% income replacement rate and a 13% contribution rate) is chosen, an additional cumulative deficit of roughly 702 trillion won is expected to accrue in the latter half of the National Pension's 70-year financial evaluation period (2093).

https://www.hankyung.com/article/202404036337Y