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 Park apologizes, urges support for curtailed pension pledge

By Lee Joo-hee

President Park Geun-hye on Thursday apologized for cropping out richer seniors from her new basic pension plan Thursday, but insisted she still stood by her pledges that had to be partially curtailed due to fiscal woes.

Her remarks at a Cabinet meeting came as the government announced its 2014 budget plan, met by angry reactions from her political rivals. The main opposition Democratic Party pledged a “budget war” against what they call a “deceptive retreat of pledges by Park.”

The budget bill is to be submitted to the National Assembly for approval. The ruling Saenuri Party, although at a majority, needs the opposition’s cooperation as a revised Assembly act prohibits the bulldozing of bills such as by allowing a filibuster.

“I express apologies that we are not able to give (the basic pension) to all the senior citizens,” Park said while presiding the meeting.

Park has been facing growing criticism for failing to channel her presidential pledges through sound finances, leading to significant slashes in her welfare pledges despite her earlier assurance to maintain them.

Park said it was inevitable to scale back the basic pension plan, which would provide between 100,000 won and 200,000 won in basic pension benefits to the poorest 70 percent of seniors 65 years of age and older based on wealth and income. She had originally promised to benefit all seniors in the age group.

The take-home amount of the basic pension is also expected to be inversely proportional to the length of subscription to the national pension for the sake of benefiting those left out of the national pension system. According to this revised plan, 90 percent of those subject to receiving the basic pension benefits are expected to receive the full 200,000 won.

“It was unavoidable realistically as we have to tighten the grip on fiscal sustainability amid an unprecedented tax revenue shortage entwined with global economic slump,” she said.

“It, however, does not mean I am abandoning my pledge, and my conviction remains unchanged that the promise made to the people must be kept,” Park said, emphasizing that she will put forth efforts into implementing the portions that have been put aside within her tenure.

Park, meanwhile, sidestepped speculation of a possible tax increase to finance the expensive pledges, instead commenting that she will continue to seek additional sources of revenue such as through regulating the underground economy and more strongly curbing tax evasion.

Park also said she will create a committee for “people’s compromise” to seek public consensus in implementing and expanding the welfare projects.

Park then refuted claims that conjoining national pension with basic pension would put long-time national pension holders at a disadvantage, explaining that the total amount that the individual takes home down the road will be larger by being subject to larger payroll from the national pension.

Experts have expressed concern that linking basic pension with the national pension would risk reducing the sense of incentive toward the national pension, thereby having more individuals opt to jump over to private pension program instead.

“The basic pension included in this budget plan is not enough but it is an alternative for the state to provide social safety net to secure minimum living standards for the seniors while not bestowing an excessive burden on the next generation,” Park said.

The DP strongly condemned Park’s explanation and said it will reconsider the government’s bill from square one.

“The budget has disregarded the public’s livelihood and welfare. The DP cannot but engage in a full-fledged budget war,” said DP floor leader Rep. Jun Byung-hun.

The DP took issue not only with the trimmed basic pension plan, but also Park’s alleged backtracking on other welfare pledges for child care and four major diseases, and hurting the municipality’s fiscal soundness.

The DP, in a meeting, rebuked Park’s budget item by item, including the trimmed-down basic pension beneficiaries, the exclusion of budget for crucial medial expenses for the four major diseases as pledged by Park, and what they called a “meager” 10 percentage point raise in state funds for free child care.

They also criticized the central government’s “unilateral acquisition tax cut” that placed local municipalities’ finances at risk and argued that the budget blueprint would escalate the country’s debt.

The DP said they will push their version of securing fiscal sustainability, such as through suspension of tax cuts for the rich, and draw up a brand new budget.

Rep. Rhee Mok-hee, the DP’s representative in the parliamentary welfare committee, said the party will consider setting up a special committee comprised of rival party members for a closer review on the government bill.

They will first convene the welfare committee meeting on Friday regardless of the participation of the ruling Saenuri Party, the DP said.

“While the government justifies their plan with an economic slump and tax revenue shortfall, the scaled-back basic pension plan was already discussed at the transition committee early this year,” said DP’s chief policymaker Chang Byoung-wan.

(jhl@heraldcorp.com)