National Pension Undergoes Reform

Celebrates come-of-age anniversary

The national pension scheme comes of age, ushering in an era of offering full-fledged old-age pension benefits. A ceremony to celebrate the 20th anniversary of the establishment of the National Pension Service (NPS) was held at the NPS on Sept. 17.
Founded in 1987, the NPS has become the principle program for the security of elderly Korean citizens, and has expanded to cover more than 18 million people and currently funds 2 million beneficiaries. Fund contributions have surged to more than 200 trillion won.
During the anniversary ceremony, 110 people were honored by the government for their contributions to the development of the national pension scheme.
An official at the Ministry of Health and Welfare said, "The expansion of the national pension scheme has been so far of prime concern, and the focus is now on complementing the pension as insured persons who have made contributions for more than 20 years are to become full-fledged beneficiaries beginning next January. The awards are designed to provide an opportunity to secure the public trust and further the development of the national pension system."The Order of Civil Merit, Moran went to Chun Keun-cheol, chief of the Information Systems Department at the NPS, who has played a leading role in such innovations as revamping the organization, the establishment of the Balanced Scorecard (BSC) for managing achievements and the Information Strategy Plan (ISP) for setting goals. He is also credited with having greatly contributed to the establishment of a strategic management system, including the introduction of Management by Objectives (MBO) for those in charge of the management of the fund.
Yoo Jae-ryong, head of the NPS Daejeon regional headquarters, was awarded the Civil Merit Medal in recognition of 20 years of service to the NPS. He played a major role in tackling thorny issues and promoting the institutional development of the NPS.
The Civil Merit Medal also went to Noh In-cheol, ex-chairman of the Korea Social Security Association, in recognition of his contribution to the development of the national pension system. Noh helped the general public understand the pension system, made institutional reforms and revised laws and regulations while serving as the chairman of National Pension Service Research Institute for a six-year tenure.
Public demand for reforming the national pension scheme have been mounting as pension contribution resources have declined due to an aging population and a lower birth rate. The reasons for the pension reform are to maintain the long-term stability of the pension fund, to eliminate intergenerational inequality, and to solve the "dead zone problem regarding aging population's income."The National Assembly has approved the pension reform bills. For long-term fund stability, the replacement rate of 60 percent will be lowered to 50 percent from 2008, and will eventually be reduced to 40 percent. Due to the current economic situation, a plan to increase the contribution rate was withdrawn.
A basic old-age pension, which is designed to pay fixed benefits to low-income elderly people, has been introduced. It is expected to become the basis for the gradual expansion of the corporate pension system in place now, the promotion of the joint private pension, and the establishment of a multi-pillar social security system.
In a related development, the government has finalized a plan to revamp the management system of the national pension fund, which is to be submitted for approval during the upcoming plenary session of the National Assembly.
According to the government plan, the National Fund Management Committee, the highest decision-making body responsible for the operation of the fund, will become a civilian entity independent of government control. The committee will be reduced from 21 people to seven, all civilians. nw

National Pension Service President Kim Ho-shik

NPS Selects Cos. for Managing Its Stock and Bond
NPS has commissioned six companies to manage its domestic stock and bond holdings for the second half of 2007.
The committee for selecting companies commissioned to manage the NPS' stocks and bonds, headed by Oh Sung-keun, executive fund director at the NPS, announced that Woori CS Asset Management, Consus Asset Management and CJ Asset Management will manage active stock funds. Tong Yang Investment Trust Management, Prudential Asset Management Co. and Hanwha Trust Management will handle active bond funds. nw