Acting President and Finance Minister Choi Sang-mok on Tuesday called on legislators swiftly to reach a bipartisan compromise on national pension reform, calling it "the most urgent" priority.
Without the agreement of both parties, South Korea's universal pension system -- which had 1,185.2 trillion won ($814.4 billion) in its reserve as of November -- will no longer remain sustainable, as South Korea is experiencing population ageing at an unprecedently fast pace, Choi said.
"In order to avoid excessive burden on anyone while maintaining stable operations of the national pension scheme, it is essential to reach a social consensus for (the people to) pay in more and receive less," Choi said at a Cabinet meeting he presided over in Seoul.
"I hereby ask the National Assembly's ruling party and the opposition party to reach an agreement as soon as possible."
According to Choi, South Korea's public retirement scheme will start operating with a deficit in 2041 and will be depleted by 2056, in line with the decline in Korea's birth rate and rapid ageing.
Choi said pension reform is the priority in addressing the growing number of the older population over other issues such as the expansion of caregiving services, medical services and job creation.
Failure to reform the pension in a timely manner will cause unpredictably serious social disruption, said Choi, who has served as acting president for a little over a month after President Yoon Suk Yeol and Prime Minister Han Duck-soo were impeached over Yoon's botched Dec. 3 declaration of martial law and aftermath.
South Korea went through two pension reforms in 1998 and in 2007.
Under the current scheme, each working individual in South Korea mandatorily contributes 9 percent of their income. If they pay into the system for 40 years, their pension payments beginning at age 65 will amount to over 40 percent of their preretirement annual income.
The two major rival parties have been at odds over what is the priority in pension reform, as the main opposition Democratic Party of Korea has argued that the parliament should now focus on raising the subscriber's contribution rate as well as the percentage of preretirement income they receive -- called the income replacement rate -- while the ruling People Power Party has called for structural reforms.
Rep. Kweon Seong-dong, floor leader of the ruling People Power Party, however, said in his address to the parliament on Tuesday that he would concede to the main opposition party's request to focus on raising the income level.
The rival parties have agreed to raise the contribution rate from 9 percent to 13 percent, but debate on the income replacement rate is ongoing, as the liberal main opposition party is calling for it to be raised to 45 percent, while the ruling bloc wants to keep the rate at the current 42 percent.
As of 2023, about 43 percent of South Korea’s 51 million people were actively contributing to the national pension scheme, while approximately 13 percent were pension recipients aged 65 and older.
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