Younger workers deeply unsatisfied with pension reform plan

Lawmakers in their 30s, 40s lead pushback along with potential presidential hopefuls

By Lee Yeon-woo

It was a typical evening on March 14 when news broke that the main opposition Democratic Party of Korea (DPK) would accept the ruling People Power Party's (PPP) pension reform plan. This marked the beginning of the first major pension system overhaul in 18 years.

Yet, a 34-year-old office worker surnamed Kim shrugged. "I don't even need to look at the details. It surely won't benefit young subscribers like me," Kim said.

Nearly two weeks later, with the details revealed, it turned out Kim was right — at least according to many other young subscribers. While the bill’s approval by the National Assembly last Thursday is historically significant, it is now overshadowed by a growing controversy.

The core of the reform bill is to raise the premium rate from 9 percent to 13 percent and increase the income replacement rate from 40 percent to 43 percent of a retiree's average monthly earnings. While this postpones the fund’s depletion date by nine years, it falls short of the structural reform many had anticipated.

The implication is that younger subscribers will pay higher premiums over a longer period, only to find the fund potentially depleted by the time they retire — unless further reforms are enacted.

"The reform plan's slogan is 'pay more, receive more.' But it overlooks the essence of the pension system. The generation that pays more is not the same as the one that receives more," a coalition of student councils from nine major universities said at a press conference at the National Assembly, Monday.

They called for a comprehensive reassessment. "We want structural reform, and we hope our voices will be reflected in the process."

These complaints gained renewed momentum as they became entangled in political strife. Younger lawmakers — along with potential presidential hopefuls, should the Constitutional Court uphold President Yoon Suk Yeol's impeachment — are intensifying the generational divide by aligning themselves with young voters.

"There is strong criticism that politicians — many of whom are already eligible for pension benefits or will soon no longer be required to pay contributions — have increased benefits for their own generation. But it shifted the burden of higher contributions onto the younger generation," seven lawmakers in their 30s and 40s, from both the ruling and opposition parties, said during a press meeting at the National Assembly, Sunday.

Political big shots, such as former PPP leader Han Dong-hoon, former presidential candidate Rep. Ahn Cheol-soo and Reform Party leader Rep. Lee Jun-seok, also urged the acting president to veto the bill.

As the criticisms continue, Lee Ki-il, first vice minister of health and welfare, acknowledged in an interview with state-owned broadcaster KTV that the reform is "incomplete." However, he emphasized the importance of "using the additional nine years secured to implement broader reform in the future."

Experts echoed his view. Given how difficult it was to take the first step toward pension reform, they stressed that the priority should now be outlining clear follow-up steps — rather than fueling further anxiety among the younger generations.

"It is a relief that an agreement was finally reached on a matter that had been essential for years but was repeatedly postponed," said Kim Tae-il, a public administration professor at Korea University.

"Since the reform only extends the fund’s depletion timeline by a few years, it falls short of achieving its original aims of fiscal stability and income security. We need to form a special committee for structural reform."