No more delay in pension reforms

President Yoon Suk Yeol must make a drastic decision, as he pledged to start three major reforms, including the national pension, if elected.

The Yoon Suk Yeol administration is considering skipping details on its national pension reform bill, to be submitted to the National Assembly later this month. If so, the reform bill will be lacking. The government wants a comprehensive pension reform encompassing the basic pension and retirement pension, according to a JoongAng Ilbo report. The Ministry of Health and Welfare neither confirmed nor denied it. The ministry only said it will draw up a comprehensive plan by the end of October.

The National Pension Service has emerged as the third largest national pension in the world after its accumulated funds topped 1,000 trillion won ($738 billion). But the health of the fund does not match its size. If left unattended, the fund will go into the red by 2041 and be depleted by 2055, according to a projection by the government in March, which means people born in 1990 won’t be able to receive their pension when they reach 65.

Despite the urgency to fix the national pension, social discourse is inactive. A fiscal projection committee of pension experts came up with 18 ideas for pension reforms last month. They agreed about paying more now and receiving later. But they failed to compact the ideas into one or two options. The presentation of too many scenarios had its limit from the start.

Since then, pension experts were sharply divided over how much to raise the income replacement rate, which is currently fixed at 40 percent. If the rate goes up, it can help ensure recipients’ post-retirement income. But at the same time, it causes more financial stress for the younger generation. A committee of pension experts plans to add another scenario on lifting the income replacement rate, but it only makes the pension reform more complicated.

Of course, the government must take various factors into account. But it must put top priority on finalizing its reform plan with substantial content. If the government fails to do that, the ball will be in the court of the legislature, which will most likely get entangled in an endless battle that doesn’t make any progress. When it was an opposition party in 2018, the People Power Party vehemently criticized the Moon Jae-in administration after it presented four scenarios for the reform.

The clock is ticking. President Yoon Suk Yeol must make a drastic decision, as he pledged to start three major reforms, including the national pension, if elected. The Democratic Party also must seriously participate in the reform for the future of the country. If both parties fail to reach a consensus because of the parliamentary elections next April, they will commit an irrevocable sin for the country.