Only “Increased Support for the Poor,” but No “Cuts for the Wealthy”… Basic Pension Expenditures to Top 30 Trillion Won in 2030 for the First Time

Pension Reform: Increased Benefits for Low-Income Seniors and Eased Reduction for Couples
Fiscal Burden Surges Compared to Last Year’s Projections

The scale of basic pension expenditures is projected to exceed 30 trillion won by 2030. While measures to provide more substantial support for low-income groups have been immediately reflected in next year's budget proposal, reforms aimed at adjusting benefits for higher-income recipients have been postponed. Coupled with ongoing population aging, this has resulted in a heavier fiscal burden on the country compared to projections from a year ago.

A citizen visiting the Seoul Northern Regional Headquarters Comprehensive Counseling Office of the National Pension Service in Seoul is consulting with an employee. Photo by Yonhap News.

According to the '2026–2030 National Fiscal Management Plan' recently submitted by the government to the National Assembly on September 6, the mandatory expenditure on basic pensions in 2030 is estimated to reach 30.0862 trillion won. Based on the main budget for this year, spending is 23.1378 trillion won, which will rise to 25.653 trillion won next year, 28.297 trillion won in 2028, and 29.1649 trillion won in 2029, surpassing the 30 trillion won threshold in 2030. The average annual growth rate has been adjusted upward by 0.1 percentage point to 6.8% compared to last year’s forecast. Additionally, annual expenditure estimates have been recalculated to be 9.042 trillion won higher for 2029 than previously projected.

For next year’s budget, the government included measures to increase the monthly benefit for 3.48 million seniors in the bottom 30% income bracket to 380,000 won (up from the current 349,000 won), and to lower the benefit reduction rate for couples in the bottom 45% from the current 20% to 10%. The benefit coverage for occupational pension recipients has also been expanded to those within the bottom 45% income group, increasing expenditures further. In contrast, actions such as changing the eligibility standard from 'the bottom 70% income group' to one linked to the median income—so-called 'benefits for the higher income bracket'—have virtually disappeared. Structural reform efforts remain adrift, as seen in the recent abrupt cancellation of a briefing on the matter by the Minister of Health and Welfare.

The expansion of the basic pension, combined with surging expenditures on other statutory welfare entitlements, is placing even more pressure on state finances. The national expenditure for basic livelihood security benefits is expected to soar from 22.4665 trillion won in 2026 to 37.8352 trillion won in 2030 due to increases in the median income benchmark and an expanded pool of recipients. National government support for health insurance will also rise by an average of 5.6% annually, reaching 17.1899 trillion won in 2030. The combined expenditure on the four major public pensions, including the National Pension Service, will grow to 121.1239 trillion won.

Total mandatory expenditures, which the government is legally obligated to budget for, will surge from 387.664 trillion won this year to 537.8548 trillion won in 2030. The proportion of mandatory spending in total state finances will also soar to 53.5% by 2030, shrinking the share of resources available for discretionary government use to less than half.

This content was produced with the assistance of AI translation services.