Ruling party highlights need for intergenerational equity in pension reform

The ruling People Power Party on Friday called for further intergenerational equity in the government’s plan to reform the country’s ailing pension system.

“In order to make the country’s retirement security system sustainable enough to be effective for the next 100 years beyond the current generation of youth to a future generation, we cannot overlook the issue of fiscal sustainability. This means that our foremost task for (the government’s) pension reform is to bring about an intergeneration equity,” Rep. Ahn Sang-hoon, head of the ruling party’s special committee on pension reform said during a debate. The debate was hosted by the People Power Party at the National Assembly in western Seoul.

Ahn’s remarks come amid a prolonged debate between the rival parties over details of the planned government-led pension reform.

Both parties have agreed on the need to raise the premium from the current 9 percent to 13 percent of income, but diverge on the income replacement rate, which is the monthly pension payment relative to the recipient’s average monthly income.

The ruling party has suggested an income replacement rate of 44 percent, up from the 40 percent set for 2028, while the Democratic Party has proposed 45 percent.

Ahn stressed that the reform must be a complete overhaul of the country’s retirement security system with the move involving not only the national pension but also other similar funds designed to support the citizens after retirement.

Health Minister Cho Kyoo-hong told lawmakers earlier this week that the government plans to unveil its pension plans early next month.

Overhauling the national pension system is one of Yoon's key agenda items. The possibility of faster-than-expected exhaustion of the pension fund has risen as a major concern here as the country is expected to become a super-aged society in 2025. The state-run National Pension Service said earlier that the fund is forecast to be depleted by 2055 after experiencing a shortfall starting in 2041.

South Korea is expected to have the world's largest share of people aged 65 years or older in the population by 2044, according to data from Statistics Korea.