National Pension and Basic Pension: Controversies Surrounding Equity

Currently, there is a debate surrounding the National Pension and Basic Pension in South Korea. The National Pension is a crucial social insurance program that many citizens contribute to regularly, serving as an important financial safety net for retirement. However, recent discussions about increasing the Basic Pension have sparked controversy among the public.

 

In summary, the current debates surrounding the National Pension and Basic Pension systems reflect concerns about the economic stability and retirement preparedness of citizens.

 

Presently, the experts from the National Pension Finance Calculation Committee and the Fund Management and Development Special Committee, both under the Ministry of Health and Welfare, are deliberating on raising the Basic Pension by KRW 100,000 while reducing the number of recipients, focusing on those in the bottom 70% income bracket. As a result, it is expected that the number of Basic Pension recipients will decrease, potentially leading to changes in the pension amount that National Pension subscribers can receive.

 

Currently, the average income among National Pension subscribers stands at KRW 2.86 million per month. Assuming that such an individual contributes premiums to the National Pension for ten years, the monthly pension they can expect to receive in retirement is just KRW 357,000. This is similar to the amount received through the Basic Pension, which could deter people from enrolling in the National Pension program.

 

Controversy also continues regarding the linkage between the Basic Pension and the National Pension. Currently, if the National Pension payout exceeds 150% of the Basic Pension amount, the Basic Pension can be reduced by up to 50%. This can lead to National Pension subscribers who have diligently paid their premiums suffering disadvantages due to an increase in the Basic Pension. For instance, someone receiving KRW 900,000 per month from the National Pension could see their Basic Pension reduced by KRW 90,000. Such a system could encourage self-employed individuals to cease National Pension contributions, potentially leading to long-term non-payment or exemptions.

 

In this situation, National Pension subscribers feel that the benefits they receive do not match the premiums they pay. If increasing the Basic Pension is not seen as a solution to the current issues, it is time to explore alternatives that address the retirement preparedness and economic stability of the citizens.

 

Furthermore, measures should be considered to enhance the efficiency of Basic Pension implementation and promote targeted welfare, as recommended by the OECD. The current blanket increase in the Basic Pension places additional strain on the national budget and may produce unintended consequences contrary to the intention of raising the payout. Consequently, there is a growing consensus that improvements in policies and systems related to both the National Pension and Basic Pension are necessary.

 

In summary, the current debates surrounding the National Pension and Basic Pension systems reflect concerns about the economic stability and retirement preparedness of citizens. Based on these discussions, it is essential for the government and related agencies to strive for more efficient and equitable systems that meet the demands of the public.