The national pension fund management rate of return fell to the worst ever last year. The National Pension Service Fund Management Headquarters announced on the 2nd that the pension fund’s management yield last year recorded -8.22%. This is the lowest rate of return since the foundation of the Fund Management Headquarters in 1999. Last year alone, the loss of the fund amounted to 79.6 trillion won. As a result, as of the end of last year, the reserve amount was only 890.466 trillion won. If the fund reserve shrinks, the timing of pension depletion is accelerated, so the fund management is in an emergency.
Despite this, the National Assembly is pretending to be attempting pension reform. The ruling and opposition parties agreed on the formation of a special committee on pension reform in July of last year and even presented a timetable to come up with a reform plan by April this year. However, while weighing the vote ahead of the general elections in April next year, he passed it on to the government, saying, “If the government issues a comprehensive national pension management plan in October, the National Assembly will receive it and make the final decision.” The Private Advisory Committee under the Special Committee on Pensions also discussed the final draft to be submitted to the National Assembly at a plenary meeting on the 2nd, but instead of a “draft of pension reform” containing specific details, it was decided to only submit a report summarizing the contents of the discussion. Even in the current administration, there are concerns that pension reform may continue to be delayed.
The National Pension Service’s Financial Estimation Expert Committee predicted that the fund would run out in 2055 if the current system is maintained. The point at which fund expenditures exceed revenues is projected to be in 2041. The point of deficit seems far in the future, but only 18 years are left. If this continues, there is even a warning that people born in the 1990s may not be able to receive pensions.
The current national pension insurance premium rate is 9% of income, which has been the same since 1999. The income replacement rate is 40%. In order to prevent depletion of pensions, there is no choice but to change the structure of ‘pay more and receive later’, which is a global trend. There is also an analysis that if the insurance premium rate is raised by 0.5 percentage point every year from 2025 to 15% by 2036, 12 years later, the point of depletion of the fund can be delayed by 16 years. It is also necessary to prepare measures to increase the rate of return by strengthening the expertise of the Fund Management Committee. The National Assembly must put their heads together over various measures, such as integrating various branches of public pensions, to create a sustainable pension system. President Yoon Seok-yeol should not put off the policy saying it is unpopular, but must persuade the people and the National Assembly with perseverance for the future of the country.
