President-elect Park Geun-hye’s ambitious pension program designed to help elderly citizens in poverty is once again at the center of debate, after some reports suggested that her handover committee has finalized a plan to use the fund managed by the National Pension Service to finance the new program.
Local newspapers reported on Monday that the transition committee and incumbent government officials have agreed to integrate the public pension system and the new pension program for citizens aged 65 and over. The incoming administration will take some 1-2 trillion won from the NPS fund every year to offer a 200,000-won monthly allowance to struggling senior citizens, most of whom don’t receive benefits from any government-backed pension programs.
The transition committee in a statement Monday said nothing had been concluded in regard to the new pension program. However, the statement wasn’t enough to appease the escalating public criticism questioning the fairness and authenticity of Park’s remarks. The president-elect some weeks ago promised that funding for the new pension scheme will come from taxes, not from other publicly raised funds.
“This is outrageous. We are already concerned about the depletion of the National Pension fund by the time I retire,” said 32-year-old office worker Park Jeong-eun.
“I don’t understand why the incoming government is trying to use money from a fund that is not sufficient to cover monthly payments for existing subscribers like myself,” said Park. Park is one of many NPS subscribers who worry that non-subscribers would also receive benefits from the money they have paid over many years, and that they might have to wait longer to receive their pension if the fund runs out. Currently, subscribers to the state-run pension service begin receiving the monthly allowance, in regard to their previous income level, at the age of 61. However, some reports warned that the government might have to raise the start-up age for pensioners to 68 by 2034.
The National Pension Service declined to comment, saying it was not in a position to, but vaguely indicated that the public pension operator should stick to the principle of social insurance that insures subscribers against all possible risks.
Korea Tax, a Seoul-based civic group sponsored by private pension operators, has been operating a signature-seeking campaign to abolish the current public pension program managed by the NPS. As of Feb. 17, more than 61,000 individuals have signed, the group said.
Meanwhile, some scholars support the controversial plan, saying the incoming government can justify its move to use the NPS fund with non-subscribers and it is not an inadequate idea.
“I think the government should use the National Pension fund to partly finance the new benefit program for the elderly under the poverty line,” said Kim Won-sub, a sociology professor at Korea University in Seoul.
Kim stressed that people have the wrong understanding of the National Pension fund and its system, believing that the fund belongs only to subscribers and non-subscribers should stay away.
“In principle, the National Pension fund is a sort of social tax, not savings, in which the government adds more public funds in order to offer much more money to subscribers than the amount of deposits they paid for,” he said.
Amid growing concern, the Ministry of Health and Welfare, which supervises the overall operation of the NPS, said that the national pension fund saw its investment yield rise nearly 7 percent in 2012 from a year earlier, mostly due to improved performance from local stock investment.
The combined amount of assets held by the NPS reached 391.9 trillion won in December 2012, up 12.4 percent from a year earlier, officials said.
Market watchers expect the number will soon eclipse that of the ABP, the national pension operator of the Netherlands, which manages 395 trillion won, to rank third in the world in the first quarter of 2013.
By Cho Chung-un (
christory@heraldcorp.com)
