“Retirement at 60, pension at 65” ... Government Employees Pension Act Remains in Force After 4-4 Constitutional Court Ruling

[Financial News] The Constitutional Court of Korea has ruled that a provision of the Government Employees Pension Act requiring retirement pensions to be paid as late as five years after a civil servant retires at 60 does not violate the Constitution. The eight justices were evenly split between finding the provision constitutional and unconstitutional, but the existing rule remains in force because the six votes required to strike it down were not secured.
According to legal circles on the 27th, the court on the 22nd heard constitutional complaint cases and petitions challenging the constitutionality of Article 11(1), clauses 3 through 6, of the supplementary provisions to the Government Employees Pension Act, and dismissed the petitions and upheld the provisions, respectively.
The cases also included that of a civil servant who claimed a pension immediately after actually retiring at the mandatory retirement age but did not receive it at once because they had not yet reached the age at which payments begin.
Person A, appointed as a local government official in June 1996, applied for a retirement pension from the Government Employees Pension Service upon retiring at the mandatory age on June 30 last year. On July 4 of the same year, however, the service notified A that pension payments could begin in 2027, when A would turn 62. The case was heard together with an earlier constitutional complaint.
The provision at issue stipulates that the age at which retirement pension payments begin for civil servants appointed from 1996 through 2009 will rise in stages depending on when they retire. Those retiring from 2024 through this year will receive pensions from age 62; those retiring next year through 2029, from age 63; those retiring from 2030 through 2032, from age 64; and those retiring in 2033 or later, from age 65.
The petitioners argued that keeping the mandatory retirement age at 60 while delaying pension payments infringed their trust in the existing system and discriminated against civil servants based on when they were appointed.
However, Justices Jeong Hyeong-sik, Kim Bok-hyeong, Cho Han-chang and Oh Young-joon, who found the provision constitutional, concluded that the public interests in stabilizing pension finances and rationalizing the system were significant. Given that the age at which pension payments begin had been revised several times, they said it was difficult to conclude that people could not have anticipated at all that payments might be delayed.
They also found that the option of receiving a pension immediately after retirement had not been completely blocked, since those meeting certain requirements could receive a reduced early retirement pension.
They also found a reasonable basis for applying different rules according to appointment date. Those appointed before 1996 had already met the pension eligibility requirements under the previous law when the revisions were made, whereas those appointed later had not, meaning their levels of reliance on the existing system differed.
By contrast, Justices Kim Hyeong-du, Jeong Jeong-mi, Jeong Gye-seon and Ma Eunhyeok issued dissenting opinions that the provision violated property rights by contravening the principle of protecting legitimate expectations.
They objected that choosing an early retirement pension to receive payments sooner results in a pension reduced by as much as 25%, and that the reduction continues to apply thereafter. They said this effectively requires retired civil servants seeking to avoid an income gap to bear economic disadvantages over an extended period.
They pointed out that even if the need to stabilize pension finances is acknowledged, that does not justify placing the burden of making ends meet after mandatory retirement solely on retired civil servants.
In a separate supplementary opinion, Justice Kim said that if the age at which retirement pension payments begin is raised, the mandatory retirement age for civil servants should also be extended so that retirement and the start of pension payments coincide.
The ruling leaves the current rules on the age at which pension payments begin in place. However, with half the justices identifying the income gap between mandatory retirement and pension eligibility as a constitutional issue, attention will turn to whether the issue continues to be discussed as the civil service retirement age and pension system are reformed.
[email protected] Yoo Seon-jun Reporter