Posted November. 23, 2004 23:17,
President Roh Moo-hyun expressed his displeasure with the opposition of Health and Welfare Minister Kim Gum-tae to the plan to mobilize the national pension fund in implementing the so-called Korean-style New Deal. Ruling party members are reportedly divided between those who support President Roh and those who support Minister Kim. The minister explained at yesterdays Cabinet meeting that some interpretations that exaggerate my remarks as having political implications are far from the truth. However, to many people, it appeared to be a power game within the government.
Minister Kims apology may put an end to the conflicts surrounding the power to manage the pension fund, but fundamental problems of the fund still remain. Regardless of whether the government triggered conflicts over the national pension plan this time or not, the issue of a lack of confidence in the national pension fund must not be ignored any longer. According to a survey, seven out of 10 respondents said that they were uncertain whether they would be able to receive the national pension in the future, and about 60 percent said they want to withdraw from the national pension plan right now.
The national pension plan is not trusted by the people because the fund is scheduled to be used up in 2047. There is an urgent need to reduce the benefit rate to 50 percent and raise the contributions to 15.9 percent of income from the current nine percent, in order to maintain the fund until 2070. However, all the ruling party does is to suggest a temporary solution to delay the time when the money is drained by three to four years and saying that it is an improvement.
In the situation, people will remain uncertain about the national pension plan even though there is a national pension asset management committee consisting of experts including the members of the Monetary Board at Bank of Korea. The opposition party argues the increase of the contributions should be considered later, but it will be more difficult to solve the problem as time passes. It is because the conflict among stakeholders will only grow further because the beneficiaries will grow geometrically.
In addition, it should be noted that the national pension fund is not pocket money of a government agency, be it the Ministry of Finance and Economy, the Ministry of Health and Welfare, or even Cheong Wa Dae. The idea to use the peoples pension fund in building social infrastructure or supporting the stock market is misguided in the first place. The government should provide institutional framework that ensures the national pension plan to be managed for the benefit of the public, but the rest should be dealt with by experts in the private sector objectively and independently on the basis of stability and profitability.