Parties inch toward pension reforms

Representatives of the main parties agreed Wednesday to pass reforms before June involving the civil service pension, aiming to reduce pension payments to retired government officials.

Reps. Cho Won-jin of the governing Saenuri Party and Kang Gi-jung of the main opposition New Politics Alliance for Democracy also agreed to refrain from issuing “provocative public statements” on the reform, so as to minimize partisan fights until a final deal is reached.

But they remained divided on whether to link the reforms to revisions strengthening the national pension, a plan backed by the main opposition. The national pension is a social welfare scheme designed to pay annuities to almost all retired South Korean taxpayers.

The agreements are also not binding, leaving room for the parties to ditch the reforms this month, observers said.

Cho and Kang agreed to pass the draft bill that would vastly downsize monthly pensions paid out to ex-government officials by May 28, the last day of this parliamentary session.

The reforms are backed by the Saenuri Party and President Park Geun-hye. They say the civil service pension is liable for over 524 trillion won ($480 billion) in public debt. They add the pension would cause an extra 10 billion won in debt per day, if left unchanged.

The NPAD has opposed the reforms unless they are linked to increases in the national pension’s income replacement rate to 50 percent from its current rate of 40. The replacement rate is a coefficient multiplied to the lifetime average monthly incomes of pensioners.

The NPAD has demanded that the number be included in any binding agreement on the civil service pension. The Saenuri Party has opposed such measures, saying any binding number on the national pension should be agreed upon in separate negotiations from the civil service pension.

But the chief negotiators expressed confidence they would finalize a deal in the coming weeks, before the May 28 deadline.

“We’ve made much progress on the 50 percent issue,” Cho said. “The key issue here is whether we will be able to write a bill that the leaders of each party can approve,” he said.

“But we’ve made meaningful progress on that.”

Kang repeated Cho, saying, there had been “much progress,” and that Tuesday’s deal would be discussed further at another meeting this Friday.

A final deal is likely to include the passage of reforms to the civil service pension and a parliamentary resolution authorizing the creation of a panel to discuss how to strengthen the national pension, observers said.

By Jeong Hunny (hj257@heraldcorp.com)