South Korea considers basic pension reform to target low-income seniors

The South Korean government is considering a major overhaul of the basic pension system, shifting from the current model of providing benefits to the bottom 70% of seniors to a system linked to the standard median income. The proposed ‘Ha-hu-sang-bak’ (more for the low-income, less for the high-income) structure aims to concentrate resources on the most vulnerable elderly populations while managing the fiscal burden of an aging society.

Under the proposed plan, the eligibility threshold would gradually decrease from 90% of the standard median income in 2027 to 80% by 2030. While low-income seniors (those below 20% of the median income) could see monthly payments rise to 400,000 KRW by 2028, payments for those above 40% of the median income would be frozen at 350,000 KRW. The plan also includes easing the reduction for couples and extending eligibility to certain occupational pension recipients if they meet income criteria.

The reform has faced significant criticism and political uncertainty. Opponents argue the changes will shrink the overall number of beneficiaries and create a ‘tragedy’ where previously eligible seniors lose all benefits. Additionally, critics note the plan fails to address the issue where basic pension payments are deducted from livelihood benefits for the poorest seniors. A scheduled briefing by the Minister of Health and Welfare was abruptly canceled shortly before it was to begin, leading to speculation that the proposal may be revised or scrapped due to political pressure.