Acquisition of Health and Social Affairs report “If 9% is maintained, deficit from 2040”
Proposed annual phased increase… Discussions in the National Assembly and opposition from public opinion are variables
A national research institute analyzed that the insurance premium rate, which is currently 9% of monthly income, should be more than doubled to more than 21% in order to delay the financial depletion crisis of the national pension as much as possible. Amid strong psychological resistance of the public to the reform plan of ‘pay more and receive less’, it is expected that there will be a significant impact if the insurance premium rate is raised so steeply.
According to the political circle on the 11th, the Korea Institute for Health and Social Affairs (HISA) recently submitted a research report to the National Assembly Legislation Research Service to stabilize the finances of the national pension. The report suggested raising the insurance premium rate (currently 9%) to more than 21% as a key measure to stabilize the finances of the national pension. The premium rate was set at 3% in 1988 when the national pension system was launched. After that, it rose to 6% in 1993 and 9% in 1998, but there was no increase for 24 years following that. There has been an analysis that if the current national pension system is maintained amid the trend of low birth rate and aging population, the budget will be exhausted by 2057.
The average insurance premium rate of member countries of the Organization for Economic Cooperation and Development (OECD) is 18.2%, more than twice that of Korea. Accordingly, the Yoon Seok-yeol administration has set pension reform, including the national pension, as one of the three major reforms this year along with labor and education.
In this survey, the Korea Health Insurance Institute set the standard for financial stability as ‘2093 accumulation rate double’. This means that the insurance premium rate must be raised by more than 12 percentage points in order to create a financial condition in which subscribers can receive pensions for two years without having to collect additional premiums in 70 years. This plan draws attention in that it is much more radical than the previous influential plan to raise the rate by 0.5 percentage point every year from 2025 to 15% in 2036. As a result, discussions on insurance premium rates are expected to become a hot topic in the future reform process led by the Special Committee on Pension Reform of the National Assembly.
According to the estimates of Yoon Seok-myung, a researcher at the National Institute of Health and Welfare, who is in charge of the research, if the insurance premium rate and payment period remain unchanged, the national pension’s financial balance will turn into a deficit from 2040. The annual deficit is expected to grow like a snowball, recording 85 trillion won in 2050, 159 trillion won in 2060, and 200 trillion won in 2070.
However, the Korea Health Insurance Service presented a scenario for a gradual increase, saying that if the insurance premium rate is raised a lot at once, a big shock is expected to the public. The report included a plan to raise the insurance premium rate by the same amount every year from next year to 2028 and finally raise it to 21.89%, and a plan to raise it every year from next year but set a target of 22.63% by 2033. A plan to raise the insurance premium rate twice a year has also been proposed.
[이희조 기자]
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