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Parties strive to break pension reform standoff

The negotiation on the civil service pension bill remained deadlocked on Monday as the Saenuri Party refused to budge while the main opposition faced internal disagreements over a compromise suggested by its newly-elected floor leader.

Rep. Lee Jong-kul, the floor leader of the New Politics Alliance for Democracy, offered a compromise on Sunday to rephrase the controversial “50 percent income replacement rate,” the number his party had insisted on putting in the bill.

Instead, the agreement would “seek to virtually increase the income replacement rate of the national pension to 50 percent.” He said he would consider expanding benefits to seniors over age 65 by expanding the income bracket to 90 to 95 percent from 70 percent, which rival parties had agreed last year.

His plan, however, failed to appeal to his party or the counterpart.

“I am confused,” said Rep. Yoo Seung-min, floor leader of ruling Saenuri Party. “We won’t be able to reach an agreement if we start talking about the conclusion even before we start negotiations,” said Yoo.

NPAD leader Moon Jae-in also refrained from fully endorsing Lee’s plan. He downplayed it as a “personal opinion,” highlighting that his party has yet to sufficiently discuss the issue.

Lee’s plan was widely seen as a move to settle partisan disputes on the bill. Rival parties have wrangled over whether to increase the benefits from national pension reform by increasing the retirement income replacement rate to 50 percent from the previous 40 percent.

The NPAD demanded that the revision “explicitly” state the benefits, called “income-replacement rate” ― a multiple of a pensioner’s average lifetime monthly income. The party claimed that the increase to 50 percent was what both parties had agreed earlier this month.

The Saenuri Party, however, dismissed the claim and said that the NPAD’s plan would place a massive financial burden on 20 million pensioners, nearly half of South Korea’s population. The ruling party asserted the increase might require a hike in taxpayers’ contribution to keep the pension afloat. It claimed the issue of the public pension was not set in stone after President Park Geun-hye openly expressed disapproval, criticizing the parties for overstepping the boundary of the negotiation designed specifically for civil service pensions.

Cheong Wa Dae had criticized the NPAD’s plan that would require an infusion of 1,702 trillion won ($1.56 trillion) in taxpayers’ money over the next 65 years. The NPAD accused the presidential office of creating a false sense of fear by inflating the numbers.

The two parties agreed earlier this month to raise the contribution rate of public service pensions from 7 percent to 9 percent in the next five years, while reducing entitlements from 1.9 percent to 1.7 percent in stages over 20 years.

The agreement was expected to be passed into law at the plenary session that followed, but remained deadlocked as the two parties differed on interpreting their discussion on the increase of the income replacement rate to 50 percent. The bill is expected to be discussed at the Assembly’s plenary session on May 28.

By Yeo Jun-suk (jasonyeo@heraldcorp.com)
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