(Ilyo Seoul Report on the National Assembly Special Committee on Pension Reform Debate) Raising Contributions Alone Has Its Limits — Discussion Needed on Using Excess Semiconductor Tax Revenue to Fund Pensions and National Health Insurance (Posted September 29, 2026)

(This is an article that contrasts Professor Yang Jae-jin, the presenter at the debate hosted by the National Assembly Special Committee on Pension Reform, with Committee Member Yun Suk-myung, a discussant, and details their respective positions by topic.

This article seems very unusual in that it frames the story by contrasting the claims of Professor Yang Jae-jin, the presenter, with those of Committee Member Yun Suk-myung, who was a discussant and not even a presenter.

It also raises the question of who supplied the source material for this article.

Despite these many questions, because Committee Member Yun Suk-myung's position

appears to be conveyed more accurately in this article

than in any other press report on yesterday's debate, the Pension Future Forum

is posting it in the "Press Coverage" section of its website.)

-. National Assembly Special Committee on Pension Reform Begins Full-Scale Discussion of Structural Reform for Old-Age Income Security, Fiscal Stabilization, and Intergenerational Equity

-. Professor Yang Jae-jin Proposes a Partially Funded System to Prevent Fund Depletion — Research Fellow Yun Suk-myung Puts a Balance Between Contributions and Benefits First

-. Government to Expand Multi-Tiered Pensions and Support for Young People — People Power Party Stresses Easing the Burden on Future Generations and Fiscal Stabilization

-. Using Additional Tax Revenue from the Semiconductor Boom for Long-Term National Pension Reserves and Stabilization Funding for National Health Insurance Is a Task for Review

Can raising the National Pension contribution rate alone secure the sustainability of pension finances?

As low birth rates and population aging shrink the working-age population that pays contributions, it has been argued that the very approach to the fiscal management of the National Pension and the Basic Pension must change.

With one proposal to draw on investment returns without depleting the pension fund and another to secure a balance between contributions and benefits first, the debate over the direction of structural pension reform is taking concrete shape.

At the policy debate 'Structural Reform for a Sustainable and Fair Pension System,' held on the 28th in Small Conference Room 1 of the National Assembly Members' Office Building, the issues of fiscal stabilization, old-age income security, and intergenerational equity that remain after the 2025 parametric reform of the National Pension were taken up as the main agenda items.

The debate, jointly hosted by Chairman Yoon Young-seok of the National Assembly Special Committee on Pension Reform and by the ruling- and opposition-party secretaries, Representative Oh Ki-hyung of the Democratic Party of Korea and Representative Ahn Sang-hoon of the People Power Party, was attended by academic experts, government officials, members of the younger generation, and others.

This discussion focused on structural reform to redesign the roles of the National Pension, the Basic Pension, and retirement pensions, going beyond the adjustment of the contribution rate and income replacement rate of the National Pension.

In particular, another question to be examined is how much responsibility the state should bear for the fiscal stabilization of the National Pension and the National Health Insurance, schemes in which it has made enrollment and payment mandatory.

Using a certain percentage of the additional tax revenue generated by the semiconductor boom as long-term funding for the National Pension and the National Health Insurance is also a policy alternative that can be considered in light of this concern.

However, this plan was not a proposal officially adopted at the debate, but an additional policy proposal expanding on the discussion of diversifying funding for public pensions raised during the debate.

Prevent Fund Depletion, or Balance Contributions and Benefits First?

The first issue is the fiscal management of the National Pension.

Professor Yang Jae-jin of Yonsei University proposed shifting the National Pension's fiscal structure to a 'partially funded defined benefit (DB)' system. The idea is to move away from the existing structure, which depends on contributions and taxes, to keep the pension fund above a certain size, and to draw continuously on fund investment returns to pay pensions.

Professor Yang observed that, with ultra-low fertility and population aging shrinking the working-age population rapidly, there are limits to sustaining the pension system on the contribution burden of future generations alone. Rather than accepting fund depletion as inevitable, he argued, funding should be built up in advance so that the fund can be sustained in perpetuity.

By contrast, Yun Suk-myung, Research Fellow Emeritus at the Korea Institute for Health and Social Affairs (KIHASA), took the position that caution is needed with reform approaches that rely excessively on investment returns.

Research Fellow Yun's analysis is that, with the income replacement rate raised to 43% by the 2025 National Pension reform, the contribution rate required for a balance between contributions and benefits reaches 21.2%. Even when the contribution rate reaches 13% in 2033, he noted, it will still fall 8.2 percentage points short of that rate.

Pointing out that investment returns can vary significantly depending on financial market conditions, he argued that an approach to first secure a balance between contributions and benefits for the pension system is necessary.

The government did not announce a position on which specific plan it would adopt.

In written congratulatory remarks, Jung Eun-kyeong, Minister of Health and Welfare, said that last year's parametric reform and higher fund investment returns have steadily improved fiscal stability, but she also stressed the need for further structural reform and for securing fiscal sustainability.

Jeong Jeom-sig, floor leader of the People Power Party, likewise said that the pension fund, the public's retirement asset, must be managed with a focus on long-term returns and stability.

Moving forward, it appears that the National Assembly will need to comprehensively review long-term projections for fund investment returns, financial market risks, and changes in contribution revenue and pension amounts payable.

Expanding Treasury Injections and Using Excess Semiconductor Tax Revenue — Diversifying Funding Becomes a New Task

The second issue is the role of the state in pension finances and the means of financing.

Professor Yang proposed injecting treasury funds in advance to hold down further increases in the contribution rate and ease the burden on future generations. The aim is to shift to a structure that keeps the National Pension Fund in place permanently and uses its investment returns to pay pensions.

For the Basic Pension as well, he proposed creating a separate Future Fund to prepare for the future fiscal burden of a growing older population.

Research Fellow Yun, by contrast, warned of the risks in the claim that large-scale treasury injections and higher investment returns can secure the sustainability of pension finances.

He noted that if a shock occurs in the financial market, it may become difficult to achieve the originally expected returns, and constraints may arise in maintaining an aggressive investment strategy.

Deputy Prime Minister and Minister of Finance and Economy Lee Hyoung-il stressed that old-age income security and fiscal sustainability must be secured at the same time. He did not, however, set out the scale of any advance national treasury injection into the National Pension or a specific funding plan.

Floor Leader Jeong Jeom-sig said that a social consensus spanning generations and classes must be built on accurate financial projections and objective data.

In this regard, using additional tax revenue generated by the semiconductor boom for the fiscal stabilization of the National Pension and the National Health Insurance can also be considered as a new policy alternative.

The National Pension and National Health Insurance are social insurance programs where enrollment and payment of contributions are mandatory by law. The state manages the operation and sustainability of these systems while enforcing enrollment and payment. Considering these institutional characteristics, it is necessary to discuss the role of the state's finances alongside the burden of contributions.

In particular, a plan to link the resources that the state secures as taxes from the additional profits of companies resulting from the semiconductor boom to the long-term fiscal stabilization of social insurance could be a subject for review.

A distinction must be made between a method of directly imposing a new burden on corporate operating profits and a method of utilizing a portion of the additional tax revenue secured according to existing tax laws.

In the latter case, it is possible to accumulate a portion of the tax revenue generated beyond a certain threshold into a separate fund or to support social insurance finances.

For example, this is a plan to allocate a certain percentage of additional tax revenue from the semiconductor boom as resources for the long-term accumulation of the National Pension and for the fiscal stabilization of National Health Insurance. The amount allocated to the National Pension would be accumulated and invested over the long term, while the amount allocated to National Health Insurance would be used for fiscal stabilization and support for essential medical services.

This is not a proposal to transfer the profits of semiconductor companies themselves into pension resources, but rather a concept to utilize a portion of the state's increased fiscal capacity resulting from the industrial boom to prepare for the future burdens of social insurance.

However, for actual implementation, it must first be examined how to calculate the additional tax revenue attributable to the semiconductor industry. It is necessary to distinguish the increase in corporate tax due to the industrial boom from the increase in tax revenue due to other economic factors.

Furthermore, as the semiconductor industry is subject to significant cyclical fluctuations, there are risks in using additional tax revenue secured during boom periods as a fixed resource for annually recurring pension payments or National Health Insurance benefits. A plan to create a separate stabilization fund for long-term use must be considered together.

Under the National Finance Act, the net budget surplus must go through statutory procedures such as the settlement of the local allocation tax, the repayment of public funds, and the repayment of national debt.

Therefore, to allocate a certain percentage of excess tax revenue as social insurance resources, the relationship with the existing fiscal system and whether related laws need to be revised must also be examined.

Such funding-diversification measures could be tied to the question of how to finance the advance national treasury injections proposed by Professor Yang. Their actual fiscal effect, however, would require separate analysis of the scale and duration of the tax revenue, fund investment returns, and other factors.

Discussion on Expanding National Treasury Support for National Health Insurance — Existing Support and Additional Resources Must Be Distinguished

The idea of using excess tax revenue from the semiconductor boom is linked not only to the National Pension but also to the fiscal management of the National Health Insurance. The National Health Insurance already operates a system of national treasury support through the general account and the National Health Promotion Fund.

According to data from the National Assembly Budget Office, the 2026 national treasury support budget for the National Health Insurance is 12.7171 trillion won, combining 10.782 trillion won from the general account and 1.9351 trillion won from the National Health Promotion Fund.

Current laws and regulations stipulate that an amount equivalent to 20% of the projected health insurance contribution revenue be provided from the general account and the National Health Promotion Fund, but the actual amount of support is affected by the budget, the fund's resources, and other factors.

The National Assembly Budget Office has pointed out that, regarding the national treasury support system for the National Health Insurance, it is necessary to increase the accuracy of contribution revenue forecasts and comprehensively examine the calculation method and support rate for subsidies.

Therefore, the plan to support the National Health Insurance with additional tax revenue from the semiconductor boom can be examined by dividing it into a method of supplementing deficiencies in existing national treasury support and a method of creating separate fiscal stabilization resources.

The important thing is to design the system so that substantial additional support is provided, rather than replacing existing national treasury subsidies with new resources.

However, the National Health Insurance differs from the National Pension in its fiscal management method. While the National Pension can utilize a fund accumulated over a long period and investment returns, for the National Health Insurance, the payment of medical expenses and fiscal stabilization for the current year are important.

Therefore, rather than applying the same funded system to both schemes, a support system tailored to the fiscal characteristics of each must be established.

A plan could be examined that focuses on long-term accumulation and securing investment returns for the National Pension, and on fiscal stabilization reserves and fiscal support for necessary fields such as essential medical care for the National Health Insurance.

Automatic Adjustment Mechanisms and Extension of Contribution Periods — Need to Simultaneously Examine Benefit Reductions and Employment Environment

The third issue is the overhaul of the pension payment system in response to changes in the population structure.

Research Fellow Yun presented a plan to apply an automatic adjustment mechanism to the insured and beneficiaries of the National Pension.

The idea is to apply to the insured a Finnish-style semi-automatic adjustment mechanism linked to changes in life expectancy, and to beneficiaries an adjustment mechanism modeled on Japan's macroeconomic slide.

An automatic adjustment mechanism is a system that reflects variables affecting pension finances, such as population structure and life expectancy, in benefit adjustments.

Along with this, Research Fellow Yun proposed raising the upper age for mandatory National Pension enrollment from the current 59 to 64. He explained that a longer contribution period could offset much of the decline in the income replacement rate that the introduction of an automatic adjustment mechanism would bring.

Drawing on overseas pension reforms, Professor Yang also examined the role of adjusting the pension eligibility age and of automatic stabilization mechanisms. His reform plan, however, focuses on easing the pressure to cut benefits and raise contributions by keeping the fund in place permanently and drawing on its investment returns.

In their written congratulatory remarks, the government and the People Power Party did not present a definitive position on the specific method of introducing an automatic adjustment mechanism or on adjusting the pension eligibility age.

In future discussions, it is necessary to examine not only the effect of the automatic adjustment mechanism on pension finances but also its impact on the effective pension amount for beneficiaries.

The extension of the contribution period also needs to be discussed in connection with the actual employment environment. This is because even if the mandatory enrollment age is raised, new problems may arise between the burden of contributions and old-age income security if employment and income for that age group are not sufficiently supported.

Basic Pension Overhaul — Support for Vulnerable Older People and Creation of a Future Fund Under Discussion

The fourth issue is the Basic Pension's benefit structure and fiscal management.

Professor Yang proposed creating a separate Future Fund for the Basic Pension as well, to prepare for the fiscal burden that future population aging will bring.

Currently, unlike the National Pension, the Basic Pension is operated using taxes as funding without a separate accumulated fund. It is a structure where fiscal expenditure expands as the older population increases.

Professor Yang explained that creating a fund in advance and utilizing it during periods when the older population increases significantly can alleviate the burden on future generations.

Research Fellow Yun's position is that the Basic Pension should concentrate its support on the more vulnerable among older people.

He argued that it is necessary to approach the problem of elderly poverty in Korea from a multidimensional perspective that considers not only income but also assets. In particular, he proposed that the system should be overhauled to concentrate social security benefits on vulnerable older people who have both low income and few assets.

The government emphasized that the poverty risk of low-income older people must be alleviated.

Minister Jung Eun-kyeong said that the National Pension, the Basic Pension, and other schemes must complement one another so that every citizen is guaranteed at least a certain standard of living in old age and low-income older people are not left at risk of poverty.

Deputy Prime Minister Lee Hyoung-il likewise named tackling the high elderly poverty rate as a major task.

The government, however, did not state its position on the specific question of whether Basic Pension eligibility would be narrowed, or on the plan to create a Future Fund.

In future structural reform, the eligibility and benefit levels of the Basic Pension, as well as its relationship with the National Pension, must be examined together.

In particular, how to design a support system for older people with low National Pension benefits, those with insufficient contribution histories, and those lacking both income and assets remains a major task.

Easing the Burden on the Younger Generation — Contribution Support and Closing Enrollment Gaps

The fifth issue is intergenerational equity.

Even after the parametric reform of the National Pension in 2025, how to manage the contribution burden of future generations remains a major task of structural reform.

Research Fellow Yun criticized the reform at the time for failing to sufficiently relieve the burden on young people and future generations. He argued that if the imbalance between current benefit levels and the contribution rate persists for a long time, the burden may be shifted onto later generations.

Professor Yang proposed measures to alleviate the contribution burden of future generations through advance national treasury injections and the utilization of fund investment returns.

The government emphasized supporting pension enrollment along with reducing the burden on the younger generation.

Minister Jung Eun-kyeong pointed to measures such as expanding the periods of military service and childbirth credited toward National Pension coverage and the 'Youth First Contribution Support Program,' scheduled for introduction in 2027.

The aim is to shore up the system so that income gaps in youth caused by schooling, job-seeking, and the like do not lead to an insecure old age.

The People Power Party also presented the alleviation of the burden on future generations as a major task of structural reform.

Floor Leader Jeong Jeom-sig stressed that the old-age income of the current generation must be secured without shifting an excessive burden onto future generations, including young people.

Chairman Yoon Young-seok of the Special Committee on Pension Reform also said that, following the 2025 parametric reform, discussions on structural reform to make the National Pension more sustainable and reduce the burden on future generations must get fully under way.

In discussions on intergenerational equity, not only the contribution burden but also the pension contribution period, expected benefits, and tax burdens must be examined together.

Furthermore, the system must be designed with the fact in mind that, even within the same younger generation, conditions for pension enrollment differ by employment type and income level.

Beyond the National Pension to a Multi-Tiered Old-Age Income Security System — Redesigning the Roles of Retirement, Personal, and Housing Pensions

The sixth issue is the matter of expanding discussions from reform centered on the National Pension to a comprehensive reform of the multi-tiered old-age income security system.

At this debate, the government emphasized that it is difficult to solve the problem of old-age income through the National Pension alone.

Minister Jung Eun-kyeong stated that a system must be established in which the National Pension, the Basic Pension, retirement pensions, personal pensions, the Housing Pension, and other schemes complement one another.

Deputy Prime Minister Lee Hyoung-il also took the position that the roles of the Basic Pension, retirement pensions, and personal pensions must be examined along with the National Pension.

Joint research by Professor Yang also examined, through overseas cases, the role of funded retirement pensions and corporate pensions in supplementing the insufficient old-age income provided by public pensions.

The People Power Party holds the position that the overall multi-tiered old-age income security system, including the Basic Pension and retirement pension, must be examined along with the National Pension.

Chairman Yoon Young-seok stated that he would examine the overall pension system and collect opinions from experts, the younger generation, and relevant government ministries to prepare legislation for structural reform and policy tasks.

In reforming the multi-tiered pension system, the task is how to link the basic old-age income security function of the National Pension, the poverty alleviation function of the Basic Pension, and the additional income security functions of retirement and personal pensions.

Coverage gaps in retirement pension enrollment and benefit receipt, wider receipt of benefits in pension form, and the effectiveness of tax incentives for personal pensions are also matters requiring follow-up review.

Comprehensive Tasks for Structural Reform — Redesigning the Roles of Contributions, the National Treasury, and Fund Returns

Taken together, the pension reform tasks raised at this debate come down to one point: the long-term fiscal stabilization of the National Pension, old-age income security,

and intergenerational equity must be examined together.

The partially funded pension reform proposed by Professor Yang emphasizes the perpetuity of the fund and the utilization of investment returns.

Research Fellow Yun holds the position that a balance between contributions and benefits must first be secured and that an automatic adjustment mechanism responding to demographic change must be introduced.

While emphasizing the tasks of old-age income security and easing the burden on future generations, the government and the People Power Party pointed to the need for social consensus on the specific methods of fiscal management.

In future discussions on structural reform by the National Assembly Special Committee on Pension Reform, how to distribute the roles of contributions, national treasury support, and fund investment returns is expected to be a major task.

In particular, the plan to utilize a portion of the additional tax revenue from the semiconductor boom as long-term funding for the National Pension and National Health Insurance can be examined as a separate policy scenario to supplement the existing contribution-centered fiscal structure.

For this plan to become an actual scheme, a comprehensive analysis is needed of the criteria for calculating the additional tax revenue and the allocation ratios, the fiscal risks posed by the industry's business cycle, and the relationship with national debt repayment and other fiscal expenditure.

Furthermore, it must be verified how much expanding treasury injections into the National Pension can reduce the contribution burden in the long term, and what impact additional support for the National Health Insurance has on the contribution burden and fiscal stabilization.

Securing the sustainability of social insurance schemes in which the state has made enrollment and payment mandatory by law is difficult to approach solely through the contribution burden on the insured. Nor can treasury injections alone resolve the long-term fiscal imbalance.

This is why it is necessary to establish appropriate roles for contributions, taxes, and fund investment returns, and to have financial projections that can compare the burdens of the current generation and future generations.

Chairman Yoon Young-seok announced his intention to reflect the views presented at this debate in the future structural reform legislation and policy tasks of the Special Committee on Pension Reform.

If the 2025 parametric reform was a process of adjusting the contribution rate and the income replacement rate, the structural reform ahead appears likely to be a process of giving concrete shape to the long-term management of pension finances, the role of the state's finances, and the structure of the multi-tiered old-age income security system.

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