The article reports on the recent discussions and agreements surrounding pension reform in South Korea, focusing on the agreement between the ruling People Power Party and the opposition Democratic Party to increase the national pension income replacement rate to 43%. However, the Third Party suggests that this agreement only delays fundamental issues, such as the depletion of pension funds, rather than solving them. During a meeting, party representatives criticized the agreement, arguing that an automatic adjustment mechanism based on demographic and economic changes is essential for sustainable pension management.
The article further discusses predictions from South Korea’s 5th National Pension Financial Projection, which forecasts that a change to a 1.2 fertility rate would lead to a budget deficit by 2041 and complete fund depletion by 2055. However, a report by the OECD suggests that these dates might be inaccurate due to current fertility rates being much lower.
Criticism also extends to the insufficient allocation of resources towards basic plans addressing low birth rates and the need for a simplified pension system. The Third Party aims to consolidate various pension systems and enhance national support to ensure consistent and adequate aid while resolving inter-generational conflicts caused by low birth rates. Both the People Power Party and the Democratic Party acknowledge the necessity of incorporating an automatic adjustment mechanism in future reform discussions facilitated by the National Assembly’s pension reform committee.