Public Pension

[Anchor Lead]

The government has devised measures to raise the public pension contribution amount in a bid to prevent the depletion of public pension funds. However, President Moon Jae-in has ordered his administration to revise the plan from scratch because higher pension contribution rates run counter to public expectations.

[Pkg]

Public pension reforms have been attempted twice since state pension was introduced three decades ago, but they have done little to ease public concerns over the depletion of funds. To address the problem, the government proposed raising the monthly public pension contribution rates. How much tax payers will have to pay and how much they will receive later, depends on whether they want to guarantee their income after retirement or boost financial stability, but in either case, raising the public pension contribution rates will be inevitable. This is because the number of people paying their public pension contributions is on the decline these days due to the low birth rate while the number of recipients continues to grow. A report on the public pension reform submitted to President Moon Jae-in by Minister of Health and Public Welfare Park Neung-hoo, reportedly calls for increasing the public pension contribution rate from the current 9percent of income to up to 15 percent. However, President Moon has instructed his administration to revise the plan so that it sufficiently reflects public opinion. In other words, the president wants the plan to be re-drafted from scratch. That's because it runs counter to the public expectations, especially the part calling for a higher contribution rate. As such, a new plan will likely keep an increase in the state pension contribution rate to the minimum. The government initially planned to disclose the plan on the public pension reform at a parliamentary hearing and submit it to the National Assembly this month. But it will likely be postponed to next month.