Estimates showed that the national pension reform plan announced by the government last month had a net benefit of about 62% less than the plan proposed by the Public Debate Committee in the last National Assembly. Net benefits are calculated by subtracting total payments from the total amount of salary received over a lifetime. According to the estimation results, the younger the population, the larger the reduction rate.
According to data estimated on the 18th by Jeon Jin-sook, a member of the National Assembly Health and Welfare Committee, and the Citizens’ Action to Strengthen Public Pensions, a civic group, the net benefit of the government plan was found to be up to 61.8% less than the majority plan of the public deliberation committee. For those born in 1999, they can receive a net benefit of 373.05 million won under the Public Deliberation Committee’s plan, while in the case of the government’s plan, they receive 142.8 million won, which means that the net benefit is reduced by 231.25 million won (61.8%). This figure reflects life expectancy based on an average earner with a 30-year national pension subscription period and assumes that the government’s automatic adjustment system will operate in 2036 when salary expenditures exceed insurance premium income.
According to the estimation results, there were differences in net benefits by age group. Those born in 1975 would receive a net benefit of 242.33 million won according to the public deliberation committee plan, but in the case of the government plan, they would receive 103.92 million won, a 46% decrease. For those born in 1985, it decreased by 56.4% from 304.29 million won to 132.65 million won, and for those born in 2000, it decreased by 61.1% from 416.9 million won to 162.17 million won.
Previously, in April of this year, the Public Debate Committee under the Special Committee on Pension Reform of the 21st National Assembly conducted a survey of citizen representatives after a debate. The subject of discussion was a plan to maintain the income replacement rate at 40% and raise the insurance premium rate to 12%, while increasing the ophthalmology income replacement rate to 50% and raising the insurance premium rate to 13%. As a result, about 6 out of 10 citizen representatives preferred the latter option of ‘paying more and receiving more.’
However, after failing to reach an agreement on pension reform at the 21st National Assembly, the government proposed a reform plan last month that would set the insurance premium rate at 13% and the income replacement rate at 42%, and introduce an automatic adjustment device that would reduce the benefit increase rate when finances deteriorate. Rep. Jeon, who conducted the estimate, said, “The Pension Reform Plan of the Yoon Seok-yeol government only focused on financial stability, so there is a problem with the pension amount being reduced.” He added, “The automatic adjustment system should be withdrawn to strengthen retirement income security, and the plan to strengthen income security is necessary.” “As one of the measures, we must actively consider introducing care credit to expand the subscription period,” he said.
Reporter Park Gyeong-min [email protected]
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