(2015 Column) The Deeply Flawed Government Employees Pension Agreement Cannot Stand as It Is
- #국민연금법
Germany's federal Government Employees Pension, with an accrual rate of 1.79, has operated on a fully funded basis for those appointed from 2007 onward, requiring a contribution rate of 35%. By contrast, Korea's accrual rate of 1.7, combined with the severance allowance (39%) converted to an equivalent accrual rate of 0.25%, yields a post-reform accrual rate for the Government Employees Pension of 1.95%. Operating under conditions comparable to those in Germany would require a contribution rate of 38%. And this is despite the state assuming full responsibility for the already-accrued unfunded liability of 524 trillion won. Japan's Government Employees Pension currently pays at an accrual rate of 1.57, yet this will be reduced to between 1.05 and 1.28 going forward, while contribution rates are raised to 18.3%—even though 50% of the Basic Pension's financing, which accounts for roughly half of the accrual rate, is funded through taxes.
