[Reset Korea] Something Is Wrong When Even Those Earning 7.96 Million Won a Month Receive the Basic Pension

[JoongAng Ilbo · Reset Korea · June 15, 2026]

Yun Suk-myung, Research Fellow Emeritus at the Korea Institute for Health and Social Affairs (KIHASA) and Head of the Pension Reform Division of Reset Korea

Following President Lee Jae-myung's proposal of "more for the lower, less for the upper" — that is, providing more to vulnerable older people — discussions on the Basic Pension overhaul are gaining momentum. The fiscal authorities are also considering ways to improve the Basic Pension along with education grants. At the "Expert Forum on the Direction of the Basic Pension Overhaul" held by the Ministry of Health and Welfare on the 9th, a consensus was formed that "more should be given to poor older people." This is because demands for an overhaul of the system are erupting as the required budget is increasing rapidly under the current system, while the elderly poverty rate remains at the highest level in the Organisation for Economic Co-operation and Development (OECD).

Focus on benefits for 'impoverished older people' / The absolute poor must receive more to alleviate absolute poverty / OECD has consistently recommended 'more for the lower, less for the upper' overhaul

Above all, in an effort to meet the 70% eligibility rule for Basic Pension recipients, older households that would count as middle class when measured against all households are also receiving the Basic Pension. This is why extraordinary measures are necessary. Since 2010, the OECD has consistently recommended a "more for the lower, less for the upper" overhaul. The main reason was that "the poverty alleviation effect is low relative to the input cost." It also took issue with the fact that older people who are not poor even by OECD standards receive the same Basic Pension amount as vulnerable older people in far deeper absolute poverty.

With cases cited in which a dual-earner couple with only earned income can receive the Basic Pension even on a monthly income of 7.96 million won, it does not seem difficult to build a national consensus on the overhaul of the system. The problem is how to overhaul it. Recently, there have been many proposals to change the eligibility threshold from the current 70% to a certain percentage of median income. While this seems reasonable at first glance, because social insurance contributions are low — about half the OECD average — median disposable income comes out higher compared to countries with the same income levels, which creates a problem where Basic Pension recipients may be over-selected. This is why an eligibility threshold more closely linked to elderly poverty seems necessary.

Considering our reality where a significant number of older people have not even escaped absolute poverty, as pointed out by the OECD, the minimum cost of living standard seems appropriate. To avoid unnecessary controversies over the appropriateness of recipient selection — that is, to block disputes regarding selection errors — even if a generous standard such as 150% of the basic subsistence cost (the livelihood benefit) is chosen as the eligibility threshold, the recipient threshold would drop sharply from 2.47 million won to 1.23 million won per month. If the system is overhauled in a direction that reduces the number of recipients and provides more to vulnerable older people, it can achieve great effects not only in budget reduction but also in poverty alleviation. To minimize political backlash, this new eligibility threshold should be used only for people turning 65, namely for the selection of new beneficiaries. For existing beneficiaries who are above the relative poverty line — that is, older people who are not poor — it seems appropriate to guarantee their right to receive benefits as per the OECD recommendation while freezing benefit increases.

Considering our reality of high elderly poverty, it is necessary to approach this in a direction that first alleviates absolute poverty. This is also an OECD recommendation. Since the minimum cost of living has not been measured since 2015, if the livelihood benefit of the National Basic Living Security System (NBLSS), which is the concept of the minimum cost of living, is operated as a substitute for the minimum cost of living and 820,000 won per month is paid, absolute poverty can be escaped. The problem in our reality is that the average amount of the National Pension, which requires contributions for more than 10 years, is around 700,000 won per month. In this situation, if the Basic Pension amount becomes 820,000 won, which is higher, recipients of the National Pension will inevitably feel a great sense of loss.

This problem can be solved if cash and in-kind benefits are provided as a mix. This is a method of providing only the minimum amount necessary for living — that is, around 350,000 won per month as currently done — in cash and supplementing the rest with in-kind-type benefits. In-kind-type items such as housing allowances, caregiving expenses, and National Health Insurance co-payments can be subsidized in cash, and various cash-like in-kind benefits provided to older people can be included in the Basic Pension amount payable. This is because if the total amount, including the cash conversion of free subway rides and other benefits, is set at 820,000 won per month — matching the livelihood benefit of the National Basic Living Security System (NBLSS) — all older people in the Republic of Korea can escape absolute poverty.

Problems will arise even with this operation if the livelihood benefit is increased rapidly. The goal of the Lee Jae-myung administration is to further increase the livelihood benefit, which is currently around 820,000 won this year after being raised from 30% to 32% of the standard median income, up to 35%. This is why a cautious approach is needed, considering that the livelihood benefit is closely linked to several other systems. Despite these limitations, the livelihood benefit is currently the most reasonable alternative.

※ Contributions by outside writers may differ from the editorial direction of this newspaper.

Source: JoongAng Ilbo (original article)