How to shun liability for pension reform

It will be sinning to the future generation if it wastes the momentum once again.

A bill to initiate pension reform has failed to go through under the 21st National Assembly, which expires on May 29. Joo Ho-young, head of the legislature’s special committee on pension reform, declared the cessation of the committee’s activities after failing to produce any agreement on the thorny issue. The special committee canceled its members’ seven-day tour of European countries to learn their pension reforms amid scorn about the belated trip with less than a month left before the expiration.

The government and legislature share the blame for negligence of their duty for putting off pension reform once again. National pension is headed for a deficit from 2041 and a complete depletion in its reserves by 2055, according to the government projection announced March 2023. By the time people born in 1990 become 65, they may not get anything because the pension will be completely depleted. Future generation will be forced to pay half of their income to cover the losses.

Although time is ticking, the government came up with a prosaic outline and dumped the burden on the legislature last October. It tried to avoid liability by being ambiguous on proposing the scope of a raise in the premium, the heart of the reform. President Yoon Suk Yeol repeatedly vowed pension reform, but the chant proved to be just rhetoric.

The discussions at the National Assembly was no better. Lawmakers tossed the ball it received from the government to a committee of outside experts. Instead of debating on the sustainability of pensions, rival party members wasted their time on political wrangling. The committee of private experts presented an outline proposing the premium rate of 13 percent and the income replacement rate of 50 percent, which was chosen through a poll on civilian representatives.

But the plan for a relatively small increase in the premium and higher replacement rate drew an outcry from a civilian pension research association prioritizing sustainability in public finance, because such a pension structure only worsens the burden on the future generation.

The ball is now in the court of the upcoming Assembly. The president and leaders of the mainstream parties must show their resolve. The premium rate stuck at 9 percent of income for 25 years must be lifted immediately. The rivalling parties must start with the provisionally agreed 13-percent premium rate.

They should be more discreet in increasing the income replacement rate to not overburden the future generation. The 22nd Assembly must regard pension reform as its highest priority. It will be sinning to the future generation if it wastes the momentum once again.