A paper by Korean economists argued that the eligibility for the basic pension should be changed to those at or below 50% of the median income of all households. The basic pension is currently paid to the bottom 70% of income earners among people 65 and older. Because it is paid to the bottom 70% within the elderly population rather than all households, critics said most seniors are included, worsening government fiscal expenditure. Earlier, President Lee Jae-myung also said, "To reduce elderly poverty, it seems we need to change the basic pension a bit."
On the 3rd, Hong Woo-hyeong, a professor of economics at Dongguk University, and Lee Sang-yeop, a professor of economics at Gyeongsang National University, stated accordingly in their paper, "A study on plans to reform the basic pension to respond to the era of super-aging," published in Public Finance Studies, an academic journal issued by the Korean Association of Public Finance.
Assuming the current basic pension system is maintained, the two calculated the share of the basic pension in the government budget over the next 10 years, taking into account average economic growth, inflation, and demographic changes. This share is projected to rise from 3.08% in 2024 to 6.07% in 2048. The share of the basic pension relative to gross domestic product (GDP) is also estimated to increase from 0.79% in 2024 to 1.70% in 2048.
They presented three directions for reforming the basic pension system and analyzed the fiscal effects. Plan 1 gradually narrows eligibility so that in 20 years it is paid only to the bottom 50% by income. In addition, the bottom 30% by income would see their pension increased by 50% from the current level, the 30–40% group would receive the current level, and the 40–70% group would see a 50% reduction.
Plan 2 pays those at or below 50% of the standard median income (the median of all household income). Plan 3 integrates the basic pension with the basic livelihood guarantee system. It creates a new senior livelihood benefit and pays those at 40% of the standard median income.
The analysis found that Plan 2 would produce the largest savings in the government budget. The research team said, "In the short term, there is a need to minimize policy shock through Plan 1 while narrowing the eligible group, and in the midterm to shift to Plan 2 so that the poverty level can be reflected." They added, "We should move to Plan 3, which introduces a senior livelihood benefit that increases the livelihood benefit amount."
Earlier, on Mar. 16, the president said on X (formerly Twitter), "To reduce elderly poverty that even leads to suicide, it seems we need to change the basic pension a little." He added, "The basic pension amount is the same for seniors with monthly income in the hundreds of thousands of won and for those with zero income," and said, "Leaving what is currently paid as is, and applying only future increases with a lower raise for higher income and a higher raise for lower income could be one way."