PENSION REFORM PLAN IN LIMBO

[Anchor Lead]

The National Pension Fund is projected to be depleted by 2055 if the current situation continues. A private consultant committee composed of pension experts made a report on pension reform measures to the National Assembly today, but they failed to produce a clear conclusion and viable proposal.

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The National Assembly's special committee on pension reform was briefed on a pension reform plan from a committee of private consultants. The specialists' committee presented the report ahead of the meeting, but failed to come to a definite conclusion. Raising individual contribution rates was inevitable to prevent the fund from being depleted by 2055. But the two sides differed on whether to increase the income replacement ratio or the money pensioners receive. The consulting committee said they couldn't narrow the difference on whether to raise both the contribution rate and the income replacement ratio or maintain the income replacement ratio while increasing just the contribution rate. Nonetheless, it was reported that the committee is looking into two most feasible plans - Raising the contribution rate to 15% while maintaining the income replacement ratio at the current 40% or upping it to 50%. That way, the fund depletion point can be pushed back as many as 14 years.

[Soundbite] Kim Yong-ha(Nat'l Assembly Special Committee on Pension Reform (March 21)) : "Timing is important when raising the contribution rate. It must be increased to the appropriate level before 2040 when the fiscal balance turns red."

The consultants failed to decide on whether to raise the pension eligibility age to 65 or older or push back the pension contribution age to beyond 59 years. The private committee presented other structural reform plans such as linking the national pension scheme to the basic pension plan or using retirement pension funds, although no conclusion was reached. The report was criticized for containing no substance and the government is once again under pressure as it has to submit a reform plan by October.

[Soundbite] Lee Seu-ran(Ministry of Health and Welfare (March 21)) : "It's like having a physical exam every 5 years. We're just sending a report every year to the Nat’l Assembly saying that the condition isn't good without taking any measures. In short, we're not taking any action."

The ruling and opposition parties will discuss extending the activity period for both the pension reform special committee and the private consulting committee scheduled to end next month.