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KMID : 1124020130290020027
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Korean Social Security Studies
2013 Volume.29 No. 2 p.27 ~ p.53
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A Critical Review of the Proposal of the New Government on Pension, “National Happy Pension”
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Yun Suk-Myung
Yang Hai-Jin
Oh Shin-Hwee
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Abstract
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The new government of Korea has proposed to introduce basic pension in place of current Basic Old-age Pension. The proposal led to nationwide debate over how to implement the basic pension in terms of coverage, benefits and financing. One of the criticism about the proposal was that there could be disadvantage to National Pension subscribers with the introduction of basic pension. In response, the government revised the proposal to differentiate benefit amount according to subscription period of National Pension. Nevertheless, the proposal of basic pension is still debating since it doesn`t seem to be effective to achieve its aim of relieving old-age poverty of Korea while requiring tremendous amounts of tax to finance it. The proposal of basic pension is also criticized for having inappropriate impact on National Pension by hampering the subscription of low-income people. For low-income people, the benefit amount of basic pension could be more than benefit amount from National Pension and this is likely to lead to delinquency or withdrawal in National Pension. In addition, the integrated operation of National Pension and basic pension, which is also proposed by new government, raises the worries of diversion of National Pension fund into basic pension in the long term although the government announces that the basic pension is to be financed by tax. Considering the abovementioned circumstances, this study analyzes the proposal of the new government on pension, “National Happy Pension”. The study assesses pension policy of the new government and evaluates its expected impacts. Also, the study suggests options alternative to the government proposal.
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KEYWORD
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National Happy Pension, Basic Pension, National Pension, Recommendation of OECD
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