The government decided to review an overhaul of the basic pension system. The move follows criticism that the current criteria do not properly reflect actual income, allowing even the middle class to receive the pension.
The Ministry of Health and Welfare said on the 13th that "as the basic pension eligibility threshold has approached 100% of the standard median income, the need to reform the system has grown," adding, "we plan to review reform options."
The basic pension is paid to the lowest 70% income group among older adults. But as seniors' incomes have risen, the eligibility threshold has also increased every year. As a result, there has been steady criticism that even people 65 and older in the comparatively better-off middle class and above are receiving the basic pension.
According to the ministry, this year's basic pension eligibility threshold for a single-person household is 2.47 million won per month. However, this is not actual monthly income but the "recognized income," so actual income can be much higher.
Recognized income is the amount calculated by applying various deductions to actual income and assets. For earned income, 1.16 million won is first deducted as a basic deduction, and then 30% of the remainder is deducted additionally.
Because of this, when there is only earned income, the recognized income falls to about half of actual monthly income. For example, even if a person 65 or older living alone has 4.68 million won per month in earned income, about 56 million won a year, the recognized income is calculated as 2.46 million won per month, making the person eligible to receive the basic pension.
The eligibility threshold for a couple household is 3.952 million won per month. Even if both spouses work and earn more than 7 million won a month, they can qualify after deductions. In effect, the basic pension is being paid even to middle-class seniors.
President Lee Jae-myung also said at a recent Cabinet meeting, "Should we pay the same basic pension to people with high incomes?" adding, "revamp it in a 'give more to those in greater need' approach so that more benefits go to people in difficult circumstances."
However, an official at the Ministry of Health and Welfare said, "Since many current programs use criteria that combine income and assets, revamping the eligibility threshold requires considerable deliberation," adding, "we will review improvement measures based on a range of views and an analysis of the issues."