Concerns are growing over the depletion of the national pension fund due to low birth rates and an aging population. This year, a long-awaited reform of the national pension system has been achieved after 18 years, but dissatisfaction with the unfavorable pension structure is surfacing among the younger generation. Consequently, presidential candidates are proposing various pension reform plans while hinting at further reforms.
Kim Moon-soo of the People Power Party and Lee Jun-seok of the Reform Party are focusing on the introduction of an 'automatic adjustment mechanism' and reducing the burden on the younger generation, while Lee Jae-myung is concentrating on expanding military service credits and increasing income for retirees. However, neither Kim Moon-soo nor Lee Jae-myung provided specific plans for reforming the national pension system.
◇ Lee Jae-myung aims to resolve national pension blind spots and push for continuous pension reform… no specific plans yet
Looking at Lee Jae-myung's ten major pledges, he emphasized strengthening support for protecting income in retirement through ▲ resolving national pension blind spots and continuously pushing for pension reform ▲ building a safety net for the youth through expanding military service credits ▲ gradually extending the retirement age in line with the pension receipt age ▲ improving the dwellings pension system.
However, the detailed content has not yet been disclosed. Lee's camp stated regarding questions about resolving national pension blind spots and pension reform, "It has not been finalized yet, so we cannot disclose it."
One of the key points that Lee has emphasized is expanding military service credits to cover the entire duration of service. Previously, both parties agreed to extend military service credits to a maximum of 12 months as part of pension reform. Lee committed to extending the retirement age as an alternative to address gaps in pensions, but specific implementation plans have not been provided.
Kim Woo-chang, a professor in the Department of Industrial and Systems Engineering at KAIST and former member of the National Pension Financial Forecasting Committee, noted, "After the fundamental reform of the national pension, both parties are lacking in specific figures and are at a stage of understanding this," and added, "The criticism from the public regarding the previous fundamental reform was significant, and given the short preparation time for the pledges, it might have been difficult to provide specific plans."
◇ Kim Moon-soo and Lee Jun-seok call for the introduction of an automatic adjustment mechanism… promising to elevate the voices of the youth
Candidates Kim Moon-soo and Lee Jun-seok have presented the introduction of the 'automatic adjustment mechanism,' which the People Power Party has long asserted, as a key pledge. Experts have pointed out that mere fundamental reform is insufficient and that a mechanism is necessary for automatically adjusting pension payouts and premium rates according to demographic changes.
The fundamental reform is the core of the national pension law amendment that was passed in March this year. It includes raising the premium rate from the current 9% to 13% and the income replacement rate from 40% to 43%. This proposal delayed the depletion of pensions by eight years but faced criticism for still failing to address the fundamental issues.
The automatic adjustment mechanism proposed as an alternative adjusts pension benefits and premium rates automatically according to demographic changes. Currently, the amount of old-age pension received by beneficiaries increases only by the previous year's consumer price inflation rate, but if this mechanism is implemented, a lower increase rate than the inflation rate can be applied, reflecting the number of subscribers and life expectancy.
Alongside this, Kim Moon-soo also proposed various pledges targeting the youth, including ▲ a second reform of the Youth Assurance National Pension ▲ expanding youth participation in pension reform committees ▲ promoting youth-led reforms ▲ achieving financially secure pension systems for future generations. However, similar to the others, there is a lack of specific execution plans, making it difficult to assess.
◇ Lee Jun-seok has presented a plan to separate new and old pensions… early government funding to support existing pensions
Among the three candidates, the one who presented the most concrete pension reform plan is Lee Jun-seok. He has proposed to separate the funding of new and old pensions through structural reform of the national pension. The premiums paid after the point of reform will be managed separately in a new pension account, intending to create a pension reform in which 'what you pay is what you receive.'
According to him, the separately managed new pension account will transition to a Defined Contribution (DC) system, where the amount received is determined by the premiums paid and investment revenues. The existing old pension will be supported by the government being injected earlier. Additionally, he also presented a plan to implement the automatic adjustment mechanism early to curb the pace of pension increases.
Experts are positively evaluating Lee's national pension reform pledge as the most concrete and proactive approach. Kim Woo-chang, the former member of the National Pension Financial Forecasting Committee, said, "Lee Jun-seok has put forward pledges that encompass all the reform plans discussed so far" and analyzed that "there seems to be an intention to seize the pension reform agenda from a position that represents the younger generation."
However, there are differing opinions among experts regarding the feasibility of separating the new and old pension finances. Kim Sung-bong, a professor at Hansung University, stated, "The separation of new and old pensions is an inevitable choice," and pointed out, "The longer the reform is delayed, the greater the financial burden the younger generation will have to bear."
On the other hand, Lee Boo-hyung, a director at the Hyundai Research Institute, remarked, "The intention is good, but due to aging, it appears that the pace of financial depletion of the existing pension will also accelerate, and early government funding ultimately burdens future generations," and added, "Discussions should also include measures such as tax increases or expanding the burden on beneficiaries as complements."