The public pension reform bill to be put to a parliamentary vote Wednesday falls short of consolidating the foundation for making the money-losing system sustainable and improving efficiency in other areas.
The leaders of the ruling Saenuri Party and the main opposition New Politics Alliance for Democracy on Saturday endorsed the bill worked out by a task force of government officials and experts appointed by the parties after months of negotiations. They evaluated it as the best possible compromise that would minimize social conflict.
But the public response seemed far from accepting their appraisal. In order to meet the deadline of negotiations, the task force bent too much to demands from civil servants’ groups. As a result, the bill can hardly be seen as being reformist.
The bill calls for raising contribution rates from the current 7 percent to 9 percent over the next five years while lowering entitlement rates from 1.9 percent to 1.7 percent in stages over the next two decades. Under this revised scheme, public employees would eventually pay 28.6 percent more while in office and receive 10.5 percent less after retirement than under the present system.
The measures are expected to save about 300 trillion won ($279 billion) in fiscal spending to help fill the public pension deficit by 2080.
But the emphasis on its long-term effect cannot be an answer to the criticism that the bill is passing over the thorny part of readjusting the pension service for civil servants to future generations.
Public employees to be recruited in the decades to come would receive less despite paying more. But those who have already retired or are nearing the retirement age would be barely affected by the revision, designed to be implemented in a gradual manner.
Therefore, the public pension shortfall will hardly be reduced in the coming years, requiring the government to spend 10 billion won every day by next year to make up the deficit. As of the end of last year, the civil servants’ pension system has caused a cumulative deficit of 12 trillion won.
Unionized public employees are voicing strong objections to the proposed bill, but their voices can hardly draw support from the public, which sees the proposal as far from being a substantial reform.
True, overhauling the public servants’ pension system has long remained an elusive task under previous administrations. President Park Geun-hye has repeatedly urged civil servants to cooperate in revising the unsustainable system. With the increasing deficits heightening a sense of crisis, however, the main political parties could and should have used it more actively as an impetus to bring about more drastic changes to the scheme.
It does not make sense for the parties to pledge to reinforce the national pension system for ordinary citizens with the money to be saved from the revision of the public pension scheme. It’s another populist move that pays little attention to fiscal feasibility.
The country may have yet to learn the lessons of incomplete reform.
