Basic Pension Spending to Top 30 Trillion Won a Year Earlier Than Expected... "Structural Reform Must Be Accelerated"

National Assembly Budget Office: "Spending to Top 31 Trillion Won in 2029"
Eligibility Cuts Scrapped; Only a Modest Increase
Experts: "Shift to a Median Household Income Threshold Without Delay"

Basic Pension spending is projected to exceed 30 trillion won for the first time in 2029, a year earlier than the government had forecast. Spending is rising as some occupational pension recipients are brought into the program and the reduction for couples is eased, while the eligibility threshold remains at the bottom 70% of the income distribution. With the number of beneficiaries growing rapidly as the population ages, critics say structural reforms, including a revision of the eligibility threshold that was planned for this year but fell through, must not be delayed any longer.

A citizen speaks with an employee at the comprehensive consultation room of the National Pension Service's Seoul Northern Regional Headquarters in Seoul. Yonhap News Agency.

A "30-Trillion-Won Basic Pension Era" One Year Earlier Than the Government Forecast

According to the "2026-2030 NABO Medium-Term Fiscal Outlook," published by the National Assembly Budget Office on Nov. 3, central government spending on the Basic Pension is expected to reach 31.2 trillion won in 2029, exceeding 30 trillion won for the first time. It is projected to rise further to 32.9 trillion won in 2030. This is about 2 trillion won more than the government’s 2030 spending forecast of 30 trillion 86.2 billion won in its National Fiscal Management Plan. The 30-trillion-won threshold is also expected to be reached a year earlier than the government had projected. The office forecast that Basic Pension spending would grow by an average of 10.8% annually from 2026 to 2030, far exceeding the government’s forecast of 6.8% average annual growth.

Along with Statistics Korea’s population projections, the office factored in the reforms planned for 2027: tiered payments based on three income brackets; easing the reduction for couples among low-income households in the bottom 0-45% of the income distribution; and expanding payments to low-income occupational pension recipients and their spouses. It estimated that these changes would require an additional 3.4 trillion to 4.6 trillion won in fiscal spending each year.

The fundamental causes of the growing fiscal burden are rapid population aging and rigid eligibility criteria. The number of Basic Pension beneficiaries rose from 2 million in 2015 to 7.06 million in 2025, a 3.5-fold increase in just 10 years. It is expected to reach 13 million by 2050. As long as eligibility remains set at the bottom 70% of the income distribution, spending will inevitably continue to rise along with the elderly population. The income threshold for determining eligibility has also risen rapidly. In 2015, it was about half of the median household income; by 2025, it had reached 93% of the median. Median household income is the income level at the midpoint when all households are ranked by income. Critics say that because eligibility remains fixed at the bottom 70% of the income distribution even as older people’s incomes and assets rise, public funds continue to go to older people who are relatively better off.

Reform Retreat: Was the Government Wary of Older Voters? Pension Committee Talks Must Be Fast-Tracked

The government initially gave serious consideration to replacing the current Basic Pension eligibility threshold—the bottom 70% of the income distribution—with a threshold set at 80% of median household income. This so-called "giving more to those who have less" approach would reduce benefits for relatively well-off older people and concentrate resources on low-income groups. However, the reform plan, which would have narrowed the pool of eligible recipients, fell through just before it was announced. Instead, the reform plan for 2027 includes tiered payments: 380,000 won per month for older people in the bottom 30% of the income distribution, 359,000 won for those in the 30-45% bracket, and 350,000 won for those in the 45-70% bracket. The government changed course to provide more to low-income groups while keeping the pool of eligible recipients unchanged. Critics say the government may have postponed structural reform out of concern about backlash from older people who could lose eligibility and the political costs of such a move. The government acknowledges the need to shift to a median household income threshold but says social discussion must come first. "We still believe the shift to a median household income threshold is necessary, but there must first be sufficient social discussion and public debate," a government official said. "We will first establish the tiered payments included in next year's budget, then work with the National Assembly Special Committee on Pension Reform and others to develop an alternative."

Experts say the revision of the eligibility threshold should not be delayed any longer. Koo Inhoe, a professor in the Department of Social Welfare at Seoul National University, said, "Changing the eligibility threshold to one based on median household income has long been a high priority among experts, so it is difficult to understand why it suddenly fell through." He added, "Even if the program initially continues to cover the bottom 70% of the income distribution, shifting to a median household income threshold now would allow the pool of eligible recipients to gradually shrink as older people’s incomes rise in the future." He said this would "ease the long-term fiscal burden and improve the system by concentrating benefits on relatively more disadvantaged groups." Professor Koo stressed, "It is a major problem that reforms to the Basic Pension are not being properly discussed by bodies such as the National Assembly Special Committee on Pension Reform. Politicians may think the issue will not win them votes, but it is of great national importance for reducing the burden on future generations and must not be neglected."

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