Jin Seong-jun, the floor leader of the Democratic Party of Korea, said on the 24th, "The positions of the two parties regarding (pension reform) are still parallel."
On that day, Jin held a press conference regarding pension reform at the National Assembly and stated, "The government and the ruling party have ultimately not accepted the Democratic Party's proposal for the income replacement rate (the ratio of money received)."
Previously, the ruling and opposition parties reached a consensus on increasing the National Pension insurance premium rate from the current 9% to 13%. However, they have not reached an agreement regarding the income replacement rate. The People Power Party and the government assert an income replacement rate of 42% to 43%, contingent upon the introduction of an automatic adjustment mechanism. The Democratic Party emphasizes that it cannot concede from an income replacement rate of 44% to 45%.
Furthermore, Jin noted, "It is not true that the Democratic Party has accepted the automatic adjustment mechanism for the National Pension, as reported."
The automatic adjustment mechanism is a device that prevents inflation from being directly reflected in pension benefits. It refers to adjusting the pension increase rate based on the changes in the average number of pension contributors and life expectancy. The opposition party has criticized this as an "automatic reduction device" that effectively cuts benefits.
He explained, "During the recent inter-party government council, the government only asked for the legal basis to be included for the automatic adjustment mechanism" and "When implementing the automatic adjustment mechanism, we proposed that prior National Assembly approval be obtained for the implementation."
He evaluated the government's proposal for a "conditional automatic adjustment mechanism" as "a progressive proposal."
However, Jin drew the line by stating, "The Democratic Party has maintained that the automatic stabilization adjustment mechanism fundamentally reduces pension benefits, but the government is asking for a basis conditionally, so we stated that we would consider it if we accepted the Democratic Party's income replacement rate."
Jin stated, "Those in the labor sector and civil society, who have direct stakes in pensions, expressed that we must be very cautious about introducing the automatic adjustment mechanism" and added, "As a result of collecting opinions centered on the Welfare Committee within the party, we expressed that even with National Assembly approval conditions, we must proceed cautiously."
Given the intensifying concerns over pension fund depletion due to low birth rates and an aging population, political parties must reach an agreement. However, discussions on pension reform are stalled due to the confrontation between the ruling and opposition parties.
A Democratic Party official stated, "We may have no choice but to consider handling pension reform purely as a head-count reform by ourselves" and added, "If we fail this time again, the next government will ultimately have to start from the beginning again, which will take a long time."