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Lawmakers collide over basic pension linked with NPS

Lawmakers from rival parties on Thursday clashed over the Park Geun-hye government’s new basic pension scheme proposed to pay less to subscribers of the existing contributory pension program.

During a parliamentary audit on the National Pension Service, lawmakers from the main opposition Democratic Party claimed that the number of voluntary subscribers dropping out from the contributory pension program surged right after the Park government’s basic pension scheme was announced last month.

The Ministry of Health announced a scaled down basic pension plan which promises to dole out between 100,000 and 200,000 won to the poorest 70 percent of seniors aged 65 and older, and according to how much time and money they have invested in NPS. The plan drew fire particularly from young NPS subscribers who might pay into the obligatory pension system for the rest of their working lives for no extra benefits.

Rep. Choi Dong-ic of DP said the number of voluntary subscribers withdrawing from NPS has doubled last month when compared to an average of monthly drop-outs of 1,101 reported last year.

A voluntary subscriber refers to an unemployed person such as a student or housewife, who voluntarily subscribes to NPS and has a right to drop out from the state program. An employed person is obliged to pay a portion of his or her monthly income to NPS.

The lawmaker lashed out the government that its plan of linking NPS with basic pension scheme would push more NPS subscribers to walk away and would make the entire operation of 400 trillion won of state pension funds instable.

NPS, state pension operator, has more than 20 million subscribers and manages more than 400 trillion won as of this year. NPS is the world’s fourth-largest pension operator.

“It costs about 275 billion won a year even if the government decides to provide 200,000 won for all elderly citizens in the lower 70 percent income bracket. The government’s plan of linking NPS to basic pension just to save some money would destabilize the entire NPS operation,” he said.

The ruling Saenuri Party and the government countered the claim, by presenting a contradictory report on the number of NPS subscribers. Rep. Kim Hyun-sook of Saenuri said the number of subscribers reported between January and September has climbed up more than 17,000, adding that this indicates that the public still place a great dependence on the NPS.

“Unlike the opposition party’s claim, the number of new NPS voluntary subscribers outnumbering drop-outs clearly shows that the public still put a greater trust on NPS. The opposition party should stop instigating NPS subscribers to withdraw from the program,” she said.

By Cho Chung-un (
catch table
Korea Herald daum