South Koreans born in 2015, who are currently in their third year of elementary school in 2024, will pay 35.6 percent of their monthly salary as national pension premiums when they turn 46. Their average lifetime premium rate will be 22.2 percent, as opposed to those born in the 1960s, who had an average premium rate of only 7.6 percent throughout their lives, according to the ‘pay more and receive more’ pension reform plan selected by the citizens‘ representatives from the National Assembly’s special committee on pension reform.

Committee chairman Kim Sang-kyun announced the results of a survey conducted among its 492 citizen representatives on Monday, in which the majority of the citizen representatives, or 56 percent, chose a plan that would raise the premium rate from the current 9 percent to 13 percent and the income replacement rate from 40 percent to 50 percent to increase income security in old age. On the other hand, 42.6 percent opted for another plan that would raise the premium rate to 12 percent while maintaining the income replacement rate as they seek fiscal stability.

There were four rounds of deliberation sessions where experts advocating for income security and fiscal stability engaged in intense arguments, counterarguments, and rebuttals, according to the committee.

Supporters of income security emphasized that Korea‘s elderly poverty rate is among the highest in the Organization for Economic Cooperation and Development (OECD) and that public pensions are not functioning properly, the committee said.

“The citizen representatives seem to think that the essential purpose of the national pension is to strengthen income security in old age,” Nam Chan-seob, a professor of social welfare at Dong-A University, said. “’The government should take responsibility for retirement security and take a proactive approach to securing pension funding.”

But there is also criticism that it is unfair to increase the burden on future generations to ensure retirement security for the older generation. If the retirement income security plan is implemented, the average premium rates for those born in 2015 and 2025 will increase by 2 and 3 percentage points respectively compared to the current rates.

“Worsening the sustainability of the pension system is unprecedented in the history of pension reforms and will subject us to global mockery,” Seok Jae-eun, a professor of social welfare at Hallym University, said. “The selected plan is not a card that should be played by Korea, which is facing an ultra-elderly society.”

Many point out that the views of future generations have not been properly reflected. “Although the citizen representatives were recruited to represent various sectors, there is a structural problem where the future generations, who will bear the greatest burden, cannot participate,” Yun Suk-myung, a research fellow at the Korea Institute for Health and Social Affairs, said.

By Ryu Young-wook and Yoon Yeon-hae

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]