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Basic Old-Age Pension in South Korea

Ministry of Health and Welfare

It is a public pension paid to low-income senior citizens based on the Basic Pension Act, that is, domestic residents aged 65 or older who are less than the calculated income recognition amount.

In South Korea, the basic old-age pension is currently referred to as the 'basic pension'. The Republic of Korea provides basic pensions to help the elderly live a comfortable retirement life and to distribute pension benefits fairly. In addition, while solving the current serious elderly poverty problem, a basic pension system was introduced to ease the burden on future generations and enjoy stable benefits in old age.

History

The predecessors of the basic pension system, which has been introduced and operated since July 2014, include the old-age allowance system, the senior pension system, and the basic old-age pension system.

Position in the Retirement Income Security System

Korea's retirement income guarantee system has a multi-pillar system proposed by the World Bank and the OECD.

Scope of recipients

Article 3 of the Basic Pension Act (Scope of Basic Pension Beneficiaries, etc.)

① The basic pension shall be paid to a person aged 65 or older and whose income recognition is less than or equal to the amount determined by the Minister of Health and Welfare (hereinafter referred to as the "selected standard").

② When the Minister of Health and Welfare determines the standard amount for selection, he/she shall ensure that 70/100 of the basic pension recipients are among those aged 65 or older.

③ Notwithstanding paragraph (1), basic pensions shall not be paid to persons prescribed by Presidential Decree and their spouses among recipients of any of the following pensions and their spouses.

Calculation of basic pension amount

Article 5 (Calculation of Basic Pension Amount)

① The basic pension shall be calculated by considering the amount of basic pension for beneficiaries (hereinafter referred to as basic pension amount) and the amount of national pension benefits under paragraph (2) or Article 5-2.<Revised January 15, 2019>

② The standard pension amount refers to the national consumer price change rate announced annually by the head of the National Statistical Office in accordance with Article 3 of the Statistics Act, as prescribed by Presidential Decree on the standard pension amount of the previous year. The same shall apply hereinafter) and shall be notified every year. In such cases, the application period of the standard pension amount announced shall be from January to December of the relevant adjustment year.<Revised January 15, 2019, January 21, 2020>

③ Notwithstanding the first sentence of paragraph (2), the standard pension amount for 2021 shall be 300,000 won.<New 2018 March 27, 2020 January 21, 2020>

Article 5-2 of the Basic Pension Act (Special Provisions for Calculating the Amount of Basic Pension for Low-income Basic Pension Beneficiaries)

① Notwithstanding the first sentence of Article 5

② the standard pension applied to those aged 65 or older with an income recognition of 40/100 or less shall be 300,000 won.<Revised January 21, 2020>

<<Act No. 16868 (2020.1.21) This article is valid until December 31, 2020>>

The financial resources of the basic pension system

The state and local governments are supposed to pay together.

Relationship with the Basic Living Security System

The relationship between the basic pension system and the basic living security system is a problem that is continuously being discussed. This is because if a recipient of basic living security aged 65 or older receives basic pension, the amount of basic pension received is reflected in the income of the basic living security recipient, which affects the basic living security benefit.