Ruling Party, 'Mandatory Pension Enrollment' Presidential Election Pledge Materialized... Can the Finances Hold?

[Financial News] The ruling Democratic Party of Korea is pushing forward with the materialization of the pension policy of the Lee Jae-myung government by consecutively proposing amendments to the National Pension Act. During the presidential election, candidate Lee Jae-myung pledged to expand pension security. While the bills proposed by the Democratic Party are also focused on security, concerns are being raised about whether the pension finances can sustain the high level of security.
According to the political circles on the 24th, Democratic Party lawmaker Lee Soo-jin proposed an amendment to the National Pension Act on the 23rd, which includes abolishing the system that excludes non-income spouses and young people without income from the national pension subscription target. In addition, the bill includes the expansion of military credits, support for pension insurance premiums for three months when 18-year-olds join the national pension, and support for pension insurance premiums during parental leave. Lee's side explained the purpose of the bill, saying, "This bill proposal is in line with the presidential pledge," and "We need to secure an additional period for premium payment to further strengthen the guarantee of the people's old-age income."
In the same party, lawmaker Nam In-soon also proposed a bill last month that includes a system for automatic enrollment in the national pension from the age of 18. Nam, when proposing the bill, stated, "As the entry of young people into the labor market is delayed and the number of non-wage workers increases, the timing of their national pension enrollment is also delayed." The Democratic Party, focusing on security, has noted the possibility that the total subscription period of prospective subscribers may decrease due to youth unemployment, potentially damaging pension security.
During the presidential election, President Lee Jae-myung also pledged to focus on pension security by expanding the subscription period through automatic enrollment in the national pension for those aged 18 and over. However, there are concerns that such a pension policy focused on expanding security may lead to financial deterioration. The concern is that the subscription period of formal subscribers aged 18 to 27 without actual income will increase through mandatory enrollment, resulting in an increase in the amount of benefits to be paid in the future. Furthermore, there are concerns that continuously implementing security-focused policies, such as expanding various credit periods without a plan to increase national pension operating profits, could potentially impact pension finances.
Regarding these concerns about pension financial impact, lawmaker Lee Soo-jin's side explained, "This bill does not support those who do not pay premiums," and "It is about giving the qualification to pay (pension premiums)." However, "The expansion of military credits is intended to recognize periods without premium payments, so the issue of financial stability is a matter of social consensus," they said.
Meanwhile, the ruling and opposition parties agreed in March this year to address concerns about the depletion of national pension finances by raising the premium rate from 9% to 13%, an increase of 4 percentage points, and reducing the income replacement rate from the initially proposed 44% by the Democratic Party to 43%, a decrease of 1 percentage point. As a result, the initially expected depletion date of national pension finances, which was 2057, is now projected to be extended by about eight years to around 2065.
gowell@fnnews.com Kim Hyung-gu Reporter