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June 30, 2007
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| Hoping to solve the tricky election-year problem of a pension system moving toward bankruptcy, a National Assembly committee yesterday voted in favor of a revision that will eventually reduce the payouts. Under the bill, passed by the National Assembly’s Health and Welfare Committee yesterday, the premium that people have to pay now won’t change. The bill will be submitted to the Assembly’s plenary session. It calls for keeping the premium that people pay into the national pension system to stay at the current level of 9 percent of their monthly income. However, the payment that subscribers receive starting at the age of 60 will gradually be reduced from 60 to 40 percent of their average monthly income by 2028. The laws on the national pension were last revised in 1998. The committee also passed revised bills on a special pension for the elderly, expanding the people eligible to receive the pension from the current 60 percent to 70 percent of the people above the age of 65, depending on their income. The elderly would receive 89,000 won ($96), 5 percent of the average monthly income of all subscribers of the national pension next year, and the payment would gradually increase up to 177,000 won, or 10 percent, by 2028. The laws to guarantee the basic living of the elderly with low incomes or assets were legislated in April. According to the Ministry of Health, the revised bills would delay the bankruptcy of the national pension budget by 13 years. If the current national pension system remains unchanged, the pension funds will dry up by 2047. Under the revised bills, that would happen in 2060. “Under the new system, two-thirds of the subscribers to the national pension will receive less than 430,000 won per month, the minimum cost of living, including the special pension payment for the elderly,” said Kim Jin-soo, professor of Yonsei University. “Instead of distributing the money to the majority of the elderly, it would work better and cost less if the money was provided exclusively to the people who really need it.” Kim Sang-ho, professor at Kwandong University, said, “Politicians have tried to resolve the problem of the drain on the national pension funds while not making the current generation pay more. As a result, the next generations will have a bigger burden.” Cho Ki-won, a director at the Ministry of Health’s pension department, said the bill is only an immediate solution. By Kim Young-hoon JoongAng Ilbo [soejung@joongang.co.kr] |
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