The presidential office on Thursday urged rival parties to delink the issue of raising payout rates for national pension subscribers from a public servants’ pension bill, stressing the latter must get priority to relieve the burden of future generations.
Cheong Wa Dae also expressed regrets that the parties could not pass the pension reform bill for civil servants on Wednesday, saying they broke their promise to the people.
“If the political community really cares about the people, (parties) must reform the public servants pension system first and then come up with a solution to strengthen the financial stability of elders. They should also secure the financial sustainability of the national pension fund by collecting public opinion,” said senior press secretary Kim Sung-woo in an impromptu news conference.
Parties failed to pass the bill as the main opposition New Politics Alliance for Democracy demanded that the revision explicitly state that the income-replacement rate of the national pension would be raised to 50 percent, from the current 40 percent.
The income-replacement rate is the figure multiplied to a pensioner’s average lifetime monthly income.
The ruling Saenuri Party rejected the demand, raising concerns that such a plan would place a huge financial burden on 20 million national pension subscribers, nearly half of South Korea’s population, as it requires a substantial hike in their contribution to the fund.
The bill, drafted by the ruling party on the request of President Park Geun-hye, was widely expected to be passed at the plenary session on Wednesday as the rival parties had agreed on a set of reform measures over the weekend.
They agreed to raise the contribution rate of public service pensions from 7 percent to 9 percent in the next five years, while reducing entitlements from 1.9 percent to 1.7 percent in stages over 20 years.
The two sides also agreed to raise the payout rates of the national pension. But the surprising decision drew fierce opposition from Cheong Wa Dae due to the fear of increased burden on taxpayers. Top officials, including Welfare Minister Moon Hyung-pyo, blasted the parties for acting outside their authorities and said it was a matter that required public approval to even begin discussions.
The presidential office’s remarks on Thursday were seen as an expression of urgency to push forward Park’s reform drives with less than three years of her term remaining.
The president, in her three-year economic reform plan unveiled last year, vowed to eradicate corruption and overhaul four sectors including the civil servants’ pension, labor and education markets.
The plans, however, have been put on hold due to the Sewol crisis last year as well as a series of political scandals. Cheong Wa Dae officials expected that the reform bill on civil servants’ pension would set in motion her reform drive, if it gets parliamentary approval.
The fate of the civil servants’ pension reform bill, however, remains unclear as the opposition NPAD is sticking to its demand to combine the issue of national pension system with the bill, while the ruling party is walking on eggshells in the face of vehement opposition from Cheong Wa Dae and some from pro-Park factions within the Saenuri Party.
By Cho Chung-un (christory@heraldcorp.com)
