On September 28, during a policy forum co-hosted by Yoon Young-seok, chair of the National Assembly's Pension Reform Special Committee, and the committee's bipartisan secretaries, the need for a Korean-style financial stabilization mechanism to enhance the sustainability of the National Pension was emphasized. The committee plans to hold a full meeting on the 29th to continue discussions based on the proposals made that day.
In his presentation at the forum, Professor Kim Hak-joo from Dongguk University analyzed that the pension reform implemented in March of last year primarily benefited those aged 50 and above, while individuals under 20 faced the most significant disadvantages. This is due to the immediate application of the income replacement rate increase starting this year, while the premium hikes will be gradually implemented over eight years.
Professor Kim proposed several directions for effective pension reform, including the introduction of a financial stabilization mechanism, separation of pension and social policies, restructuring of basic pensions, and labor market reforms.
He particularly highlighted the necessity of adopting a 'Korean-style hybrid financial stabilization mechanism' that integrates international examples, such as Finland's life expectancy coefficient, which delays the pension eligibility age as life expectancy increases, and Sweden's 'financial brake' that balances total pension payouts with reserves and future premium income. He stressed that the mechanism should operate based on numerical data rather than political convenience.
Professor Yang Jae-jin from Yonsei University suggested maintaining the National Pension premium rate at 13% while transitioning to a 'partially funded defined benefit (DB)' model that does not assume fund depletion. This approach aims to enhance fund management returns and utilize government contributions to sustain the National Pension fund over the long term while using operational profits as a source for pension payouts.
Experts at the forum unanimously agreed that the current method of providing basic pensions uniformly to the bottom 70% of elderly individuals should be revised. Professor Kim proposed restructuring support for vulnerable elderly groups exposed to absolute poverty through a mixed cash and in-kind support model, while Professor Yang suggested redefining eligibility criteria based on '100% of median income' as an alternative.
The ruling People Power Party, represented by leader Jang Dong-hyuk and floor leader Jeong Jeom-sik, attended the forum, asserting the need for long-term financial stability measures that future generations can bear. Jang stated, "Pension reforms that rely on the sacrifices of future generations or solely protect them are not feasible," urging for concrete reform proposals that allow national, retirement, and personal pensions to complement each other.
People Power Party member Ahn Sang-hoon, the committee's secretary, remarked that the government's previous proposals during last month's pension committee meeting merely indicated a willingness to continue discussions on government support and financial stabilization. He called for the government to provide answers regarding the establishment of principles for managing the National Pension fund.
In this context, the ruling and opposition parties will hold a full meeting of the pension committee on the 29th to continue discussions based on the alternatives presented at the forum. They plan to develop improvement measures through reports from relevant ministries and inquiries. Given that issues related to structural reform, which have been postponed since the parameter reform, are now on the discussion table, it is expected that related discussions will gain momentum.
Meanwhile, the ruling and opposition parties had previously agreed in March of last year to gradually increase the National Pension premium rate from 9% to 13% and to raise the income replacement rate from 40% to 43% by three percentage points. However, discussions on restructuring the income security system and financial stability were to continue within the National Assembly's pension committee.
In his presentation at the forum, Professor Kim Hak-joo from Dongguk University analyzed that the pension reform implemented in March of last year primarily benefited those aged 50 and above, while individuals under 20 faced the most significant disadvantages. This is due to the immediate application of the income replacement rate increase starting this year, while the premium hikes will be gradually implemented over eight years.
Professor Kim proposed several directions for effective pension reform, including the introduction of a financial stabilization mechanism, separation of pension and social policies, restructuring of basic pensions, and labor market reforms.
He particularly highlighted the necessity of adopting a 'Korean-style hybrid financial stabilization mechanism' that integrates international examples, such as Finland's life expectancy coefficient, which delays the pension eligibility age as life expectancy increases, and Sweden's 'financial brake' that balances total pension payouts with reserves and future premium income. He stressed that the mechanism should operate based on numerical data rather than political convenience.
Professor Yang Jae-jin from Yonsei University suggested maintaining the National Pension premium rate at 13% while transitioning to a 'partially funded defined benefit (DB)' model that does not assume fund depletion. This approach aims to enhance fund management returns and utilize government contributions to sustain the National Pension fund over the long term while using operational profits as a source for pension payouts.
Experts at the forum unanimously agreed that the current method of providing basic pensions uniformly to the bottom 70% of elderly individuals should be revised. Professor Kim proposed restructuring support for vulnerable elderly groups exposed to absolute poverty through a mixed cash and in-kind support model, while Professor Yang suggested redefining eligibility criteria based on '100% of median income' as an alternative.
The ruling People Power Party, represented by leader Jang Dong-hyuk and floor leader Jeong Jeom-sik, attended the forum, asserting the need for long-term financial stability measures that future generations can bear. Jang stated, "Pension reforms that rely on the sacrifices of future generations or solely protect them are not feasible," urging for concrete reform proposals that allow national, retirement, and personal pensions to complement each other.
People Power Party member Ahn Sang-hoon, the committee's secretary, remarked that the government's previous proposals during last month's pension committee meeting merely indicated a willingness to continue discussions on government support and financial stabilization. He called for the government to provide answers regarding the establishment of principles for managing the National Pension fund.
In this context, the ruling and opposition parties will hold a full meeting of the pension committee on the 29th to continue discussions based on the alternatives presented at the forum. They plan to develop improvement measures through reports from relevant ministries and inquiries. Given that issues related to structural reform, which have been postponed since the parameter reform, are now on the discussion table, it is expected that related discussions will gain momentum.
Meanwhile, the ruling and opposition parties had previously agreed in March of last year to gradually increase the National Pension premium rate from 9% to 13% and to raise the income replacement rate from 40% to 43% by three percentage points. However, discussions on restructuring the income security system and financial stability were to continue within the National Assembly's pension committee.
* This article has been translated by AI.
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