Updated August. 26, 2014 04:02
The government plans to increase retirement benefits instead of reducing retirement pensions in a public official pension reform. In other words, it plans to reduce pensions for government officials compared to national pensions and increase retirement benefits which are paid in a lump sum at retirement. This is because public officials receive small retirement benefits while employees in the private sector receive severance pay apart from national pensions.
It is true that public officials retirement benefits are smaller than employees who work at large companies. An official who worked for the central government for 17 years received 20 million won (19,579 US dollars) in retirement benefits. The issue is how much they will be increased. If the decrease in pensions is offset by the increase in retirement benefits, it cannot be a pension reform. If the government proceeds with the plan without unveiling the numbers of pensions by years of service and by job grade and retirement benefits, it will be under criticism for playing cheap tricks.
The government said it would increase retirement benefits to match those of companies in the private sector, saying that government officials retirement benefits are only half those of employees in the private sector. However, the standard is not clear. A significant number of employees in the private sector including 60 percent of non-regular workers cannot receive retirement benefits. More than one million officials have different job grades and all of them cannot get retirement benefits equivalent to those doled out by large companies. Moreover, an increase in retirement benefits is not in line with the government policy that intends to help the retirement pension scheme take root. The government plans to mandate retirement pension programs to companies with 300 or more employees to shift retirement benefits to retirement pensions. Some say that officials retirement pensions should be adjusted to the level of national pensions and their retirement benefits should be converted into retirement pensions.
The government employee pension scheme has been reformed three times since 1995, but deficits have been snowballing because officials reform their own retirement pensions at their own discretion. A good example was a cut in pension benefits for new government officials while maintaining the amount for existing officials in 2009. Meanwhile, the National Pension Service changed the scheme for existing subscribers as well as new subscribers to pay more and get less.
The government has to support 2.5 trillion won (2.44 billion dollars) to the government pension this year. It has to give 22 trillion won (21.54 million dollars) of taxes to the government pension and the military pension for five years. However, one retired government employee received a monthly average of 2.19 million won (2,140 dollars), which is three times 840,000 won (822.32 dollars), an amount that the subscriber of the national pension receives per month, last year. If the government tries to play a trick in the government pension reform plan next month again, it will be under severe public criticism.