The government has unveiled plans to utilize the benefits of growth from the AI transformation to support vulnerable groups. In the 'New Government Economic Growth Strategy' announced on the 22nd, the government stated that it would work on improving the pension system, stabilizing the lives of the youth, working-class citizens, and the middle class, and alleviating the burden of child-rearing.
Improvements to the income reduction system for low-income couples, easing the reduction of earned income pensions, and reformation of housing pensions for the elderly are also included in the policies. The government will also promote an increase in housing benefits and establish ongoing support for rent for young people without homes. Measures to address low birth rates and an aging population will be strengthened, such as expanding child allowances, increasing maternity and paternity leave pay, and enhancing the benefits for reduced working hours during parenting.
◇ Pension system adjustments to secure income in old age
The government will adjust the pension system to ensure income security in old age. It will gradually improve so that couples who both receive the basic pension will not have their pension amount reduced. Currently, the basic pension is paid to the bottom 70% of earners among seniors aged 65 and older, and if both spouses receive it simultaneously, each will see a 20% reduction. The reduction in pension due to income activities will also be eased. The current system reduces pensions if one earns more than an average of 3.09 million won per month, leading to complaints that 'working reduces pensions.'
The gradual mandatory implementation of retirement pensions will also be pursued. This aims to convert retirement payments, which are currently received as a lump sum, into pensions, reducing elderly poverty. The housing pension system, which provides living expenses using dwellings as collateral, will also be reformed. Although interest among the elderly has been increasing, the enrollment rate is only 1.89% as of last October.
◇ Measures to reduce living expenses in communication, housing, transportation, and care
Measures to reduce living expenses for young people, working-class citizens, and the middle class will be expanded. The government will first gradually expand the '1,000-won breakfast project,' which is currently limited to selected universities. Support for low-income households for heating and cooling costs through the energy voucher program will also be broadened to reduce blind spots.
To reduce household communication costs, the 'National Data Safety Option' will also be introduced. Basic services such as searching and message sending will be available without additional fees after the basic data is exhausted. Transportation cost passes for young people, citizens, and seniors will be introduced to lower transportation expenses.
Community-integrated care will also be strengthened. The government is considering including care services in nursing homes under health insurance and long-term care insurance.
Support for rent for young people without homes will be transitioned from a pilot project to a permanent program. Young people aged 19 to 34, with household income below 60% of the median income and individual household income below 100%, can receive 200,000 won monthly for two years. Weekend couples living apart due to jobs will also receive individual tax credits for their rent, allowing a combined annual deduction of up to 10 million won.
◇ Child allowance payment age raised from 8 to 13... older worker retirement age extension also pursued
The government will also strengthen measures against low birth rates and an aging population. The age for child allowance payments will be gradually expanded from the current 8 years to under 13 years by 2030. This means that first-year middle school students who have not yet passed their birthday will also receive child allowances. According to data received by National Assembly member Kim Mi-ae from the Ministry of Health and Welfare, an additional budget of 3.5414 trillion won is expected to be allocated over the next five years (2026-2030) due to the increase in payment age.
The income tax deduction limit for credit card spending on children will be raised to 500,000 won. However, for those with total income exceeding 70 million won, it will increase to 250,000 won per child, with a maximum of 500,000 won. The tax credit for extracurricular tutoring fees will be expanded to include students up to the second grade of elementary school, and vouchers for after-school programs will also be supported.
For low-income groups, additional payments for maternity and paternity leave will be provided, and benefits for reduced working hours during parenting will also be increased. To ease the burden on employers, support funds for substitute workers will be expanded. The government will create a roadmap for reducing working hours and also encourage the spread of a four-and-a-half-day workweek.
Participation in economic activities by young people and the elderly will also be increased. AI-specialized training will be established for young people, and the expansion of job-seeking promotion allowances will be considered. For the elderly, the gradual extension of the retirement age and mandatory re-employment support services will be pursued. Social service-type and private-sector elderly jobs will also be gradually expanded.