[Editorial] Public Pension Reform

The revision plan for public servant pensions has been unveiled. Newly hired public officials will receive a similar amount of retirement benefits in the national pension scheme that will soon be revised. Current government employees will see their benefits gradually drop, while their retirement age increases from the current 54-62 to 65. This is a draft plan from the Ministry of Government Administration and Home Affairs, but it is a welcome development since the momentum to reform special pension systems has been created.

The pension benefits for public officials will drop from the current 76 percent of the monthly average payment over the three years before retirement to 50 percent, the same amount under the national pension system. New government officials will subscribe to the national pension scheme and a retirement pension plan, similar to the U.S.’s TSP (Thrift Savings Plan), will be introduced. All theses are desirable changes. However, the government should not jump on extending the retirement age as part of its pension reform plan. Extending retirement age is a national obligation for an aging society. However, under the name of shrinking pensions for public servants, they are trying to be the first beneficiary of delayed retirement compared with those in the private sector. This is unfair for salaried workers of private companies. Also, since the payment amount of the last three years at work will be bigger, this may well dilute reform measures. Inflating retirement age requires social consensus apart from the pension reform drive and should encompass both the public and private sectors. If the government is committed to extending the retirement age, it should first restructure the current payment system by eliminating a seniority-based system and introducing a job-based system or salary peak system.

Even taking into account the fact that a government employee pension is different from the national pension scheme in nature and does not give retirement allowances, it has a skewed payment system. A former government employee who worked for 30 to 33 years and retired at 60 received 2.01 million won a month on average last year. A retired Korean under the national pension scheme for 30 years can receive an average of 1.16 million won a month at the most. This year, again, taxpayers’ money was poured into the government employee pension fund that was 670 billion won in the red.

If the government employee pension, the military personnel pension and private school teachers pension remain unchanged, their yearly deficit is estimated to reach over 26 trillion won by 2030. They work without worries of being fired and are supported with the taxpayers’ money after retirement.

The Korea Federation of Teacher’s Association and the government employees’ labor union are threatening to “stop pension reform at any cost.” Yet this will not convince the public who has complaints about national pension reform efforts but refrain from expressing them. It is lamentable that government employees who should take the lead in sharing the burden to prevent a national crisis stemming from the collapse of pension schemes are opposing the reform drive.