At a forum hosted by the Democratic Party of Korea's special committee on pension reform, a proposal was made to inject state funds in advance to prevent the National Pension Fund from being depleted. The debate on pension reform has focused on raising premiums and boosting fund returns, but the argument was that the state should go a step further and take responsibility.
The Democratic Party's pension task force hosted a forum on the 13th at the National Assembly titled "The role of national finances in improving intergenerational equity in the National Pension."
Won Jong-hyeon, Chairperson of the National Pension Stewardship Responsibility Committee, who delivered the keynote presentation, assessed the current fund structure by saying, "The system's sustainability relies only on fund management." With parametric adjustments to pension reform in March this year, the contribution rate will be raised from 9% to 13%, and if the National Pension maintains returns in the 6% range, premium income is expected to outpace fund expenditure until the mid-2030s. However, Chairperson Won's assessment is that this approach is not sustainable.
Won emphasized a "government role" approach. Chairperson Won said, "The government's direct contribution is only about 10 billion won a year for the corporation's operating costs, and measures like birth and unemployment credits address past occurrences, so they are ex post."
Chairperson Won proposed approaching the issue from the perspective of the "rate of return on national fiscal investment." He argued, "If the government puts in 10 trillion won in 2025, even assuming a conservative operating return of 4.5%, it becomes 40 trillion won by 2055, and assuming a 6% return, it becomes 57 trillion won," adding, "By 2070, when the fund is depleted, a 6% return would yield almost 150 trillion won." He stressed, "If the government contributes in advance now, it will significantly reduce the future burden."
He also argued that if the government injects 10 trillion won annually for 10 years, totaling 100 trillion won, and manages it at a 4.5% return, about 500 trillion won would be accumulated by 2055 and more than 1,200 trillion won by 2070, which could offset a substantial portion of the projected annual deficit (around 1,500 trillion won).
Chairperson Won again emphasized strengthening government responsibility by citing overseas examples. In the case of Japan's GPIF (Government Pension Investment Fund), the government contributes about 20% of the fund, and Norway's "Oil Fund" deposits all oil revenues into a fund for future generations. By contrast, in Korea, the fund size relative to gross domestic product (GDP) is the world's third largest, but the national contribution ratio is among the lowest in the Organization for Economic Cooperation and Development (OECD), Chairperson Won noted.
Other participants also agreed on the need for active fiscal injections by the state. Oh Ki-hyeong, a Democratic Party lawmaker who serves as the ruling party secretary of the National Assembly's special committee on pensions, said, "The only ways to make the National Pension sustainable are to raise the contribution rate, increase the operating return, or put more funds into it," adding, "The Ministry of Health and Welfare and the Ministry of Economy and Finance should seriously discuss how to secure the funding."
Democratic Party lawmaker Kim Yun said, "If we give birth and military service credits to the younger generation, and increase support for pension premiums for young people who work in unstable platform jobs, we could both ease the younger generation's pension anxiety and ensure their old-age income," adding, "In that respect, it is extremely important to find ways to increase the state's fiscal input."
Jang Jae-hyeok, executive managing director of planning at the National Pension Service (NPS), said, "In terms of the scale of fiscal input, allocating 0.5% to 1% of the government budget depending on fiscal conditions could ease concerns about fund depletion," and proposed, "We should create a Future Fund." The idea is for the government to subsidize the National Pension with 0.5 to 1 percentage point of the annual budget (3 trillion to 7 trillion won) each year, and for the National Pension Service to combine these subsidies with existing investment funds (1,300 trillion won) to make overseas investments.