The two main political parties are facing mounting criticism for agreeing to expand payouts from the national pension service without suggesting plans on how to fund the increase.
The agreement was attached to their deal reached at the weekend to revise the civil servants’ pension system. The revision, which fell short of public expectations, is projected to save some 333 trillion won ($309 billion) in fiscal spending to fill its shortfall over the next seven decades by making government employees pay more while in office and receive less after retirement.
The two main parties agreed to use 20 percent of the saved money to reinvigorate the national pension service for ordinary citizens. They made no other mention on how to finance their proposal to increase the nominal income replacement rate ― the percentage of a subscriber’s average annual income paid out after retirement as a pension ― to 50 percent from the current 40 percent.
According to the Ministry of Health and Welfare, this measure is estimated to cost about 1,669 trillion won by 2083. The premiums paid by a subscriber would have to double in order to cover the cost, or more tax would need to be collected.
It was just absurd that the leaders of the ruling Saenuri Party and the main opposition New Politics Alliance for Democracy hailed the deal as an example of reaching a compromise. Negotiators from the two parties bent too much to demands from civil servants groups and placed an unbearable burden on the public purse. They went beyond proper negotiating authority to arbitrarily make changes to the national pension scheme without going through the process of collecting public opinions.
Both of the main parties are being drawn deeper into the trap of populism in the run-up to next year’s parliamentary elections and the 2017 presidential vote. It would only deepen voter distrust in politics if politicians continue to churn out irresponsible pledges while currying favor with interest groups.
Saenuri chairman Rep. Kim Moo-sung was said to have disregarded complaints from the Health Ministry when endorsing the deal with the opposition party. In the face of growing backlash, he said more discussion could be made at a panel to be formed later to reach a broader social consensus. This attitude is certainly not what voters expect from a responsible ruling party leader.
