An advisory panel on pension reform on Wednesday suggested the government gradually increase the pension contribution rate by 2017 for sustainable management of the public fund. The National Pension Fund is projected to sustain losses beginning in 2044 and be fully depleted by 2060, according to a recent finance estimation.
In an alternative to the pension hike scheme, the panel also proposed freezing the contribution rate at the current level of 9 percent by the year 2040 by diversifying the revenue base.
The committee also advised the Ministry of Health and Welfare to expand pension credits for parents and those who served in the military.
The plans were suggested at a public hearing session held in Seoul as part of the government’s effort to seek consensus on a wide range of ideas for the envisioned pension reform.
The Health Ministry plans to finalize the pension reform plan next month, based on ideas suggested by committees, financial estimations and public response.
The government, however, is unlikely to push ahead with the pension hike scheme as it faces strong opposition from taxpayers.
The Park Geun-hye administration pulled back its tax hike plan last week in the face of strong public opposition, although it sought to implement welfare pledges made by the president herself.
The Health Ministry plans to submit its final plan on pension reform in October, along with a separate pension scheme designed for senior citizens aged 65 and over. Late last year during the presidential campaign, Park promised to offer 200,000 won to all citizens aged 65 and up. The so-called “Basic Pension” plan was scaled down recently in the face of budgetary pressure.
By Cho Chung-un (firstname.lastname@example.org