[Editorial] National Pension’s Ministers’ Opposition Has Good Reasons

Health and Welfare Minister Kim Geun-tae projected a conflicting voice against those of President Roh Moo-hyun and Lee Hun-jai, the deputy prime minister and minister of Finance and Economy, about the use of the national pension fund. Minister Kim revolted to the president and the DPM’s way of handling the issue, leading toward investing the national pension fund while leaving the ministries in charge of the pensions program to follow without a word. I believe Minister Kim has good reasons for his opposition.

The national pension fund total stands at 136 trillion won, which will mount up to 680 trillion by the year 2035. The government is planning on investing this fund to building social overhead capital (SOC) and educational welfare facilities as well as using it to prevent hostile mergers and acquisitions (M&A) of businesses. Citizens who poured in their earnings for their retirement, however, are naturally feeling insecure about the government’s unilateral plan to use their hard earned money.

The national pension fund is essentially different from the government fund. Pension funds can be used as investment funds for SOC, but it will have to be a safe and profitable business. That is the reason for some to suggest that it is much more reasonable to issue SOC bonds and buy them with pension funds instead of putting them into direct investment in SOC.

“If we do not un-bundle the money tied-up in pension funds, the economy may struggle. We need to stimulate securities investment first,” said the president. It is difficult, however, for the people to shed doubts about the plan with the past experience of the government using national pension funds as a stimulant for the stock market and suffering a loss of capital. Also, protecting corporate ownership, in principle, is a task for the business itself.”

It was a blunder on the part of Cheong Wa Dae and the Ministry of Finance to have left out the ministry in direct involvement while planning to use the pension funds to stimulate the economy. As Minister Kim said, the Ministry of Health and Welfare, which is in charge of managing national pension funds, has the responsibility of safeguarding the people’s hard-earned money. In a country without a well-founded welfare system, such policy, which shakes the stability of the national pensions program by the root, is a direct threat to the people’s life after retirement.