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Report: Pension Corporation Asked for More Than It Could Spend
By Ki-Jeong
Ko, Dong-a-Ilbo
South
Korea
October 28, 2005
It was found that only 22.5 percent of government money intended to fill the deficit in the government employee's pension was used.
Keen on securing as much budget money as possible, the Government Employees Pension Corporation, which is in charge of the management of the pension, has been requesting excessive amounts of budget funding,
According to a report titled "Budget Analysis 2006" released by the National Assembly Budget Office on October 27, the government injected a total of 1.28 trillion won into the government employee pension for the period between 2001 and 2004, to make up the deficit. But only 288.9 billion won was spent.
In 2001, only 59.9 billion won, or 6.9 percent of 861.2 billion won the government subsidized, was used. In 2002, not a single penny was spent out of the government subsidy amounting to 370.2 billion won. As a result, no fresh government money was allocated in 2003, because the balance was brought forward from the previous year.
In 2004, even with an accumulated balance of 383.5 billion won, the pension received additional budget funding of 49.5 billion won. But again, a meager 174.2 billion won was spent.
The pension has been managed very inefficiently, given that it spent only 22.5 percent of the total budget while the Veterans Pension spent 97.6 percent of its budget for the same period.
The excessively large amount of balance results from the corporation's repeated requests for excessive budget funding.
Park In-hwa, a budget analysis administrator of the National Assembly Budget Office, said, "The corporation has overblown the estimated retiring allowance reserve and the Ministry of Government Administration and Home Affairs has been unable or unwilling to supervise the pension management effectively."
In response, the corporation explained "In the wake of the Asian financial crisis, a large number of government employees were dismissed, driving up the retiring allowance reserve. The corporation requested subsidies to prepare itself for a similar occurrence, but far fewer employees have been dismissed since then. So less budget money has been spent than expected."
The government revised the government employee pension act in 2001 and began to fill the pension deficit at that time.
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