NATIONAL

Park’s elderly pension plan stirs debate

By Korea Herald
  • Published : Jan 11, 2013 - 20:33
  • Updated : Jan 11, 2013 - 20:33
Transition team officials are struggling to find ways to finance President-elect Park Geun-hye’s pledge to increase support for elderly people amid budget constraints and conflicting opinions.

During the campaign Park promised a monthly cash allowance of 200,000 won ($190) for all Koreans aged 65 and over.

An official at the handover committee on Thursday fielded an idea that the next government could tap into the national pension fund, a move that could draw an angry backlash from younger people and aggravate the already deepening divide between age groups.

“The money in the national pension scheme is our private property, not a public purse,” a citizen wrote online after it was reported that for the team is considering a proposal for the National Pension Scheme to pay about 20-30 percent of the estimated annual 7 trillion won required to bankroll the envisioned program.

The labor union of the state-run National Pension Service issued a statement in opposition to the reported option.

“Whatever amount is needed to roll out the subsidy program, it should be collected through taxation ― possibly through more taxes on the rich,” it said, stressing that any plan to use the pension fund would require broad social consensus.

Currently, the government doles out 97,100 won monthly to about 4 million people who are aged 65 and over and belong to the lower 70 percentile income bracket. Park pledged to more than double the subsidy amount and to expand the program to benefit all seniors regardless of their income.

“The basic old-age pension is now run entirely on taxes, separate from the National Pension Scheme. Given the rate of aging of Korea’s population, the program is certain to put an increasing burden on taxpayers,” an official at the transition team was quoted by Yonhap News as saying. “It would be wise to integrate the two pension schemes.”

The NPS is a mandatory public pension scheme to which all salaried workers in Korea contribute a portion of their monthly income to prepare for their post-retirement life. Due to the rapid aging of the population and extended lifespan, the fund, if its contribution and payout structure are left unrevised, is projected to run out by 2060.

Because of this, there has been no political discussion in Korea about tapping into the fund to cover governmental welfare programs.

Political observers say the plan could add fuel to the conflict between younger and older generations, which was laid bare during the presidential campaign, over whom the government should use its limited welfare resources on.

Senior voters were the key to Park’s victory and the president-elect recently reiterated her determination to follow through with her pledges for them in a visit to the Korean Senior Citizens Association. Younger voters had given overwhelming support to Parks’ liberal rival Moon Jae-in.

The universal livelihood subsidy is just one of the expensive pledges Park had made to rally senior voters. Others include a full medical support for patients of four serious diseases ― cancer, cardiac, cerebrovascular disorders and rare and incurable diseases ― and free dental implant surgeries for senior citizens.

By Lee Sun-young (milaya@heraldcorp.com)