The Democratic Party decided on the 14th to accept the People Power Party's proposal to raise the National Pension income replacement rate (amount received) from the current 40% to 43%. Until now, both ruling and opposition parties have agreed to increase the insurance premium rate (amount paid) from the current 9% to 13%, but they have each claimed 43% and 44% for the income replacement rate. In this situation, the Democratic Party accepted the ruling party's proposal at the direction of Representative Lee Jae-myung.
Jin Sung-jun, chair of the Democratic Party's Policy Committee, stated during the Supreme Council meeting in Gwanghwamun that morning, "We decided to make a significant concession after discussions in the Supreme Council at the direction of Representative Lee Jae-myung." He noted that if the People Power Party accepts the ▲clarification of government payment guarantees ▲expansion of credits for childbirth and military service ▲increased support for low-income insurance premiums, the Democratic Party will also accept the 43% proposal for the income replacement rate.
Chair Jin said, "During the 3rd National Policy Meeting, the People Power Party argued that they cannot accept the Democratic Party's proposed income replacement rate of 44% without the 'automatic adjustment mechanism' and left the table without discussing the agenda, including the supplementary budget." He stated, "The Democratic Party believes it cannot neglect the livelihood economy, which is facing a crisis due to the civil unrest." He added, "Pension reform is essential for the sustainability of the National Pension, which guarantees income in old age."
He noted, "The three issues, including the clarification of government payment guarantees, have been sufficiently discussed during the National Assembly's Health and Welfare Committee's bill review process, and it has been confirmed that there are no disagreements between the ruling and opposition parties." He added, "The government also agreed on the direction and principles. Detailed discussions are needed, but I believe the People Power Party will not refuse."
However, it was stated that they would not accept the government proposal to introduce the 'automatic adjustment mechanism'. The automatic adjustment mechanism is a tool that adjusts pension amounts in relation to life expectancy and the number of pension subscribers for the stability of pension finances. The government and ruling party have advocated for the introduction of this mechanism and the income replacement rate of 43%, but the Democratic Party decided not to accept the automatic adjustment mechanism in exchange for conceding 1% on the income replacement rate.
Chair Jin emphasized, "The automatic adjustment mechanism is more a part of structural reform than parameter reform," and noted, "The results can vary significantly depending on how the detailed design and timing are handled." He continued, "Opposition to the introduction of the mechanism has been voiced by labor and civil society experts, and the Democratic Party has consistently maintained that caution is necessary regarding the introduction of the automatic adjustment mechanism."