For-profit pension investment needed

The National Assembly Budget Office has demanded a cut in tolls at certain expressways such as the Seoul Outer Ring Expressway and Daegu Busan Expressway. “With the public sector having more than half the shares in six expressways, including the Seoul Outer Ring Expressway and Incheon International Airport Railroad, they have become public organizations in practice. So fees for the use of such highways should be cut to the levels of those for ordinary expressways built by government funds,” the office said.

The cuts in tolls will incur losses to private investors who still have shares in the expressways. A bigger problem is that the national pension is included on the list of public funds holding stakes in private sector investment projects. The pension is the safety net of the Korean people in their later years. Unlike government funds that prioritize public welfare instead of rate of return, national pension funds should emphasize rate of return. This is why the Korean National Pension System is expanding its investment targets to real estate at home and abroad.

In the initial phase of the civilian government, politicians attempted to enact a law allowing government investment in national pension funds in public investment and financing projects. National pension invested in government bonds but failed to collect a fair amount of interest under the Roh Moo-hyun administration. Despite this, then Health and Welfare Minister Rhyu Si-min tried to cover this mistake by saying, “Both pension funds and taxes are the people’s money.” Whenever such an incident happens, pension holders are at a loss. Any attempt to utilize national pension as government funds is wrong since it places the cause and needs of the government before the people, who entrust their money with the government for their silver years.

The government must guarantee the operational autonomy and political neutrality of national pension. The National Pension Fund Management Committee should be completely independent from the government like the Bank of Korea’s Monetary Policy Committee. Staff at the National Assembly Secretariat are government employees and pension holders. They seem to have made such a suggestion because their silver years have no relation to national pension.

The number of national pension holders has exceeded 20 million. Under the current system, however, senior citizens will receive less than 600,000 won (508 U.S. dollars) a month in 2028, far less than the amount needed to lead a retiree`s life in this rapidly aging society. Many of the elderly are expected to live more than 100 years in the near future, but for more than half of them, national pension is their lone source of income in their later years. The government should learn a lesson from government employee pension systems in California, the U.S. and the Netherlands to make Korea`s national pension profitable and safe.