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Plan to Trim Pensions Decried

by Moon Gap-sik, Chosun Ilbo

 August 8, 2003

The government will lower the amount of pension payouts again, to 50 percent of the average wage during the contribution period. Labor strongly opposes the move and warned that the labor-government dispute regarding the five-day workweek system could spread to the national pension issue.

The government already lowered the payout percentage this month to 55 percent, down from 60 percent. But in order to stabilize the pension account's finances, the government announced that payouts would be lowered to 50 percent from 2008. The pension premium, meanwhile, now 9 percent of income, will rise to 10.38 percent in 2010. The government will then increase the premium every five years until it reaches 15.9 percent in 2030.

The government will be discussing its reformation bill for the national pension with related ministries until the bill is submitted to the National Assembly on Aug. 18. The government plans to hold public hearings as soon as the final plan is confirmed.

Labor also claimed that the government has started "killing" the national pension in order to expand the markets for private insurance companies, and declared that it would start a strike against the reform bill.

The Korean Confederation of Trade Unions and the Federation of Korean Trade Unions together warned that they would impede the National Assembly from passing the government reform bill in September.

The confederation explained that if pension payouts were lowered to 50 percent then a person who has been paying the pension for 40 years will received a monthly W670,000 ($570), or $140,000 less that what he should originally have received.

The umbrella union group also claimed that the government bill lowered the value of the national pension, and demanded that the government maintain the payout rates but lower the insurance premium rates instead.


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