KOREA - The government is planning to reduce retired public workers' pension benefits through a reform of the public workers state pension fund.
An official of the ministry of government administration and home affairs said the government was aiming to design a reform bill that would tackle the “snowballing deficit” of the public workers’ pension fund.
The reform is to be pushed through after minister Lee Yong-sup was said to have come to an agreement with other ministers during a cabinet meeting.
Concrete details have not yet been announced although the government did say won80,000 ($85) would be supplied monthly in a basic retirement pension monthly to 45% of seniors in the lower income class.
Government officials have also suggested the reform would focus on reducing pension benefits for retired public workers.
The discussions were sparked by concerns the pension fund would go bankrupt.
The government employee pension suffered a won609.6bn (US$637 m) deficit last year, expected to increase to won1.47 trn in 2007, won3.35 trn in 2011 and won13.81 trn in 2020, according to government estimates.
Currently, public workers are required to pay contributions of 17% while receiving up to 76% of their average wages during the last three years of work as a pension.
The National Pension Fund, on the other hand, required workers to pay in 9% of their wages and receive a pension worth a sum ranging from 30 to 60% of their average wages.
Pension reform has been at a standstill for three years while the pension fund’s debts continue to mount.
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