Minutes of the 2023 Fifth National Pension Financial Estimation Committee

(The closing portion of the minutes of the final meeting)

○ Yoon Seok-myung, Committee Member: I do not know what will happen going forward, but if the income replacement rate is kept at 40% and the contribution rate is kept at 9%, a cumulative deficit of 9,770 trillion won in present value will arise by 2093. If the income replacement rate is kept at 40% and the contribution rate is raised by 0.6 percentage point each year for ten years, up to 15%, the cumulative deficit will be reduced by 3,700 trillion won. So even if the contribution rate is raised to 15%, as long as the income replacement rate is kept at 40%, the National Pension's cumulative deficit in present value will still remain above 4,000 trillion won.

○ Yang Jae-jin, Committee Member: That is why the committee, among other things, raised the assumed fund investment return by 1 percentage point.

○ Yoon Seok-myung, Committee Member: Whether we can actually raise the fund investment return every year the way we hope to is something we cannot know. That is why comparing scenarios primarily based on the most fundamental, core factor — that is, the combination of the income replacement rate and contribution rate increases — can be the most objective approach.

○ Jeon Byeong-mok, Committee Member: That would be difficult to calculate.

○ Yoon Seok-myung, Committee Member: According to projections by the National Assembly Budget Office, if the income replacement rate is raised to 50% and the contribution rate is raised to 12%, then on top of the 7,750 trillion won that would already arise if the income replacement rate were kept at 40%, an additional cumulative deficit of 1,400 trillion won would be added, bringing the total to 9,100 trillion won. Even if we cannot show that much detail, I think it would be reliable to at least show how much the cumulative deficit differs across the alternatives.

○ Kwon Mun-il, Committee Member: No country ever uses absolute amounts for figures 70, 80, or 90 years out. This is because every unit needs to be relative to something over the given period. When a monetary figure is presented without knowing the scale of GDP at that future point, there is no way to judge whether it is excessive or not. That is why most present figures as a share of GDP. I feel that using absolute amounts lowers the standard of us as experts. I have never seen it done that way. I do not think we should be using figures that should not be used, or figures whose meaning is hard to grasp, for the sake of carrying out reform.