(Pension Future Forum Commentary) Preparing for the Shift in the Basic Pension Eligibility Criterion… “The Method for Calculating Income and Property Must Be Simplified” (2026.09.01.)
(The Pension Future Forum
issues a strong warning that the contents of the following
National Pension Research Institute report could be abused
in the course of overhauling and operating
the Basic Pension!
The proposal to exclude
a high-value owner-occupied home
from the method for calculating
recognized income for the Basic Pension
runs much too far ahead of itself.
That is because people are taking an interim settlement of severance pay
to buy a home, and
leveraging everything they have
in order to
buy
a home.
Because poverty rates are calculated
mainly on disposable income,
people with high-value assets
are still classified as poor older people;
in that peculiarly Korean situation,
this is all the more true!
The matter raised
in this report
is an issue that can wait until
it has been settled that the current
quasi-universal Basic Pension is to be overhauled,
as in most OECD countries,
into a National minimum scheme
targeted only at the poor —
raising it then
would be soon enough.
Why!
Why, of all days, today —
a day so extraordinarily sensitive
in relation to the Basic Pension overhaul —
are the contents of a report of this kind
being carried in the press!
The Pension Future Forum
hereby puts a public question
about the intent and the ulterior motive behind it.
Is this too,
following the parametric deterioration of the National Pension
on March 20 last year,
an attempt to entrench the vested interests
of those aged 50 and over
still further!)
National Pension Research Institute: “Consider a High-Value-Asset Cut-Off and an Exclusion for the Owner-Occupied Primary Residence”
The government is pursuing a shift to a “more for the lower, less for the upper” structure, changing the Basic Pension eligibility criterion from the current “bottom 70% by income among people aged 65 and over” to a formula linked to the standard median income, so as to support hard-pressed and vulnerable older people more generously.
(The Basic Pension overhaul described above has not yet been settled. There is room for it to become an even greater deterioration than at present.)
Since a change in the eligibility criterion would make entitlement depend more directly than at present on how income and property are calculated, a proposal has been made that the complicated method for calculating recognized income (assessed income plus the income-converted value of assets) be reworked at the same time.
According to the National Pension Service on the 1st, National Pension Research Institute researchers Choi Ok-geum and Hong Seong-un proposed, in a policy report titled “Options for Improving the Recognized-Income Standard for the Basic Pension in Light of Socioeconomic Change,” that, in preparation for a possible overhaul of the Basic Pension into a minimum income guarantee that concentrates protection on low-income older people, the method for calculating recognized income be simplified and the deduction standards re-established.
(Excerpt omitted)
The idea is that, instead of examining houses, land, deposits, and cars one by one and computing them through a complicated income-conversion formula as at present, a cut-off (Cut-off) approach should be introduced — outright disqualification above an asset ceiling — under which anyone holding assets above a set level is excluded from eligibility altogether.
At the same time, they listed as a matter for review the option of excluding from the calculation of property the one home an older person actually lives in. This reflects the fact that the home one occupies in old age is a necessity that cannot readily be sold and turned into immediate living expenses.
In the United Kingdom, the United States, and other major advanced welfare states abroad, owner-occupied homes and the land they stand on are likewise left out of the asset test. The researchers explained that, given the reality that the assets of Korea’s older people are concentrated in real estate, a scheme is needed that, in conjunction with a high-value-asset cut-off, protects the home they actually live in.
(Additional explanation from the Pension Future Forum on the passage above: the pension systems these countries operate, the way they run the related programs, and the philosophy behind them are entirely different from ours. This is a textbook blind spot of cross-country comparison that extracts only the parts it needs.)
By contrast, they proposed that financial assets such as deposits and shares, which can be converted into cash immediately, be treated more strictly than housing or land. The aim is that once financial assets exceed a set amount, a higher conversion rate, as in Australia, should be applied, so that low-income, low-asset older people are supported more generously than older people with comparatively large financial assets.
