I recently looked up the four-character idiom
hahu-sangbak
(하후상박)—a phrase heard unusually often these days—in the Standard Korean Language Dictionary. Its definition was given as "being generous to those below and frugal to those above." It occurred to me that if there is only "generosity to the bottom" without the "frugality at the top," a government might win praise from low-income recipients while avoiding backlash from wealthier seniors. That thought came to mind today as the Ministry of Health and Welfare unveiled its reform plan for the Basic Pension—which had been described under the banner of
hahu-sangbak
for nearly seven months—only to draw critiques that the plan is generous to the bottom while failing to trim benefits at the top.
The emergence of this debate traces back to January 10. During a Cabinet meeting, President Lee Jae-myung broached the issue of Basic Pension reform with Minister of Health and Welfare Jung Eun-kyeong, noting, "I understand this has recently emerged as a topic of debate." President Lee pointed out, "People with monthly incomes of over 2 million won still receive 340,000 won in basic pension benefits," adding, "That seems somewhat strange." His point was whether it makes sense to distribute funds that way when the fiscal burden continues to grow by trillions of won. Citing the severe rate of elderly poverty, President Lee proposed a reform direction, asking, "Shouldn't we make it more generous to the lower-income and less to the higher-income?" Minister Jung responded, "We are discussing reform plans as there are criticisms that it is appropriate to pay more to those in difficult circumstances."
From that point on, this differential approach became the guiding premise of the Basic Pension reform. About two months later, on March 16, President Lee mentioned the term again on social media. "To reduce elderly poverty that even drives people to suicide, I think we need to reform the Basic Pension," he wrote, pointing out the reality that "seniors making millions of won a month and seniors with zero income receive the exact same basic pension amount." Highlighting the direction of giving more to seniors in poverty, he asked the public for their thoughts on applying this principle "only to future benefit increases."
The Welfare Ministry followed suit. During a departmental work report on July 16, Minister Jung presented a slide titled "Normalization of the Basic Pension" and declared that the system would be overhauled to provide greater support to lower-income seniors. The concrete method proposed was introducing a new benchmark based on the "standard median income." Minister Jung explained, "The principle of
hahu-sangbak
has been established, and we are crafting a reform plan in two directions: moving away from fixing the selection criteria at 70% and instead adopting a relative evaluation based on standard median income."
Why the "Bottom 70% Income" Rule Became an IssueDiscussions in this direction began with the awareness that the current selection method for Basic Pension recipients fails to accurately reflect the changing economic realities of the elderly. Currently, seniors aged 65 and older whose household recognized income falls below the eligibility threshold receive 350,000 won per month. This applies when the recognized income—calculated by factoring in both income and assets—is lower than the selection criteria amount, which effectively serves as the ceiling for receiving benefits. The government currently sets this eligibility threshold at a specific level to cover the widely mentioned "bottom 70%." In other words, regardless of how the overall economic status of the elderly population shifts, the threshold is adjusted so that the bottom 70% of seniors by recognized income qualify for the Basic Pension. For 2026, the threshold is set at 2.47 million won for single-person households and 3.95 million won for married couples.
As a result, even if more seniors become relatively wealthy, the number of beneficiaries does not decrease because recipients are selected solely based on the income distribution within the elderly bracket. This shift becomes clearer when compared to the "standard median income." Standard median income refers to the income of the household situated exactly in the middle when all households in the country are lined up by income—a relative figure. While the Basic Pension eligibility threshold was about half of the standard median income in 2015, it reached 93% relative to the standard median income in 2025. This indicates that seniors in substantially better financial shape compared to the past are now receiving the Basic Pension.
A senior in the bottom 1% of recognized income and a senior in the 69th percentile receive the exact same 350,000 won. While the introduction of the Basic Pension has reduced elderly poverty, the rate remains high compared to other countries, and criticisms persist that the income level of low-income seniors remains inadequate relative to the pace of improvement among middle- and upper-income seniors. In addition, as National Pension benefit levels gradually rise, some argue that the Basic Pension must focus more strictly on alleviating elderly poverty. On top of this, with South Korea entering an era of 10 million senior citizens, the number of Basic Pension recipients will inevitably continue to grow. The number of beneficiaries surged from 2 million in 2015 to 6.5 million in 2023. Consequently, the budget spent on the Basic Pension more than tripled, jumping from 6.8 trillion won in 2014 to 22.6 trillion won in 2023. As the elderly population grows, spending increases, and more seniors are relatively affluent, the government faced a deep dilemma. That is precisely how the push for a tiered reform emerged.
The Long-Awaited Reform: What Was Actually UnveiledThis Basic Pension reform plan had been regarded as the most critical and core agenda item for the Welfare Ministry in the second half of the year. To implement the plan starting next year, reports circulated that the ministry had invested significant effort into coordinating the reform during early budget discussions with the Ministry of Planning and Budget and other agencies. That is why the events of recent weeks appeared all the more puzzling.
At around 5:30 p.m. on August 26, the Welfare Ministry notified the press corps that Minister Jung Eun-kyeong would personally hold a briefing on August 27 to explain the Basic Pension reform plan. The briefing was scheduled for 2:00 p.m. on August 27. However, the briefing was abruptly canceled around 12:50 p.m. that day, roughly an hour before it was set to begin. The reason given was that "certain details of the Basic Pension reform plan have not been finalized." It was difficult to understand why a briefing had been announced before finalizing a reform plan that was supposed to have undergone exhaustive discussions.
Then on August 28, the ministry announced that an advance briefing on its 2027 budget proposal would take place yesterday (August 31). Because any pension reform slated for next year would have to be reflected in next year's budget, a reporter publicly asked whether the Basic Pension reform plan would be explained at this briefing. The question inquired whether there would be an explanation regarding the unilaterally canceled briefing, but the ministry did not answer. Naturally, reporters flooded the ministry with questions about the pension reform during yesterday's budget briefing.
Questions focused heavily on the Basic Pension because the announced reform plan differed sharply from the direction that had previously been signaled. This was evident right from the eligibility criteria. The ministry decided to "maintain the target coverage rate of 70% for seniors," meaning that the broad framework of the current system would remain unchanged so that all seniors in the bottom 70% of recognized income continue to receive the pension. The proposal to introduce the standard median income as an eligibility criterion, which Minister Jung had previously mentioned, was nowhere to be found.
Instead, the plan included a policy to transition the current system—which pays a uniform 350,000 won to the bottom 70%—into a tiered benefit structure. Seniors in the bottom 0 to 30% income bracket will receive 380,000 won, an increase of 30,000 won; those in the 30 to 45% bracket will receive 359,000 won linked to inflation; and those in the 45 to 70% bracket will continue to receive the current 350,000 won. Under this scheme, the ministry explained that the budget allocated for the Basic Pension will increase by more than 2 trillion won, rising from 23.1 trillion won this year to 25.7 trillion won next year.
Welfare Ministry: "Ensuring No One Receives Less Than Before"As explained earlier, the standard median income is a relative benchmark. Because it represents the exact midpoint of all households in the country, it serves as a representative standard across various public assistance programs, including the National Basic Livelihood Security System. For this reason, many experts had argued that the Basic Pension should also draw its line using the standard median income rather than a blanket percentage of the elderly population. The reform plan initially reviewed within the ministry was reportedly set to draw the eligibility line at 90% of the standard median income, but the plan actually unveiled was vastly different.
Faced with a barrage of questions regarding the departure from the previously discussed direction, a ministry official replied, "We gave it a great deal of thought, but we believe social discussions have not yet been sufficient." At the same time, the official stated that among the various options reviewed, changing the eligibility benchmark from the current target coverage rate to standard median income is still considered necessary. The official added, "In any case, we have included sufficient support measures for the low-income bracket and reflected in the budget that no one will receive less than they currently do."
Reporters immediately raised the question that this explanation itself implies: "There is generosity for the low-income, but where is the reduction for the higher-income?" When asked why the ministry decided to maintain the status quo despite previously pledging a balanced reform, the official repeated a similar answer: "We believe a change is necessary, but because this significantly affects senior citizens and requires considering the multi-pillar pension framework together, we will undergo further discussion." When the official added that the matter would also be discussed in the National Assembly's Special Committee on Pension Reform, reporters asked again whether a government plan should not have been finalized before heading to parliament. The official simply reiterated that further social discussions are required.
Insufficient Social Dialogue: What Lies Ahead?Under the Basic Pension Act, the program undergoes an adequacy evaluation every five years. The Ministry of Health and Welfare must evaluate every five years the living standards of recipients, whether benefit levels are appropriate considering consumer prices and National Pension payouts, and the fiscal requirements needed to support the system. The final report released by the Basic Pension Adequacy Evaluation Committee in September 2023 concluded that paying the Basic Pension based on a 70% target coverage rate was not appropriate. As noted earlier in outlining the rationale for reform, the report stated that the current system is inadequate when considering the economic conditions of today's seniors, the sustainability of the pension, and the ambiguous nature of the institution.
The report highlighted that the proportion of Basic Pension recipients who also receive the National Pension nearly doubled in 2022 compared to 2014, that maintaining the 70% standard would cause fiscal expenditures to reach 238 trillion won by 2070, and that the program operates in a quasi-universal manner despite requiring asset testing. In light of this, the report proposed reform directions, including "reviewing improvement measures such as phasing out the 70% target coverage rate over the long term" and "considering adjusting the current eligibility threshold in line with the standard median income."
The pension reform plan released by the Welfare Ministry in 2024 also included measures to provide thicker support to vulnerable, low-income seniors while proposing the use of the standard median income as the benchmark. It proposed prioritizing seniors earning less than 50% of the standard median income to receive up to 400,000 won in pension benefits. It also addressed the issue where receiving the Basic Pension reduces livelihood benefits under the Basic Livelihood Security System by the same amount (the so-called "giving with one hand and taking back with the other" problem) and proposed excluding the Basic Pension from recognized income for livelihood benefits. However, none of these discussions were reflected in the latest reform package.
As the ministry official stated, social dialogue may indeed have been insufficient. If so, it is worth asking whether the government believed that social consensus had matured during the past seven months, throughout which it pursued reform based on the dual premises of tiered benefits and standard median income adoption with plans to announce measures in late August or early September. In particular, if trimming benefits for higher-income seniors was abandoned solely out of concern over backlash from existing recipients—as suggested by the official's remark that "no one will receive less than they currently do"—it is necessary to reflect on how thoroughly this aspect was discussed. One must also ask whether expanding benefits for the bottom without trimming the top is truly a sustainable approach.
Clarifying the Identity of the Basic PensionLooking back at the history of the Basic Pension, its origins lie in the 1991 Old-Age Allowance. It started by providing 20,000 to 30,000 won to public assistance recipients aged 70 and older whose livelihood benefits were insufficient. In 1998, this transformed into the Elderly Pension, providing 20,000 to 50,000 won to recipients of basic livelihood security and near-poverty seniors aged 65 and older. In 2008, it became the Basic Old-Age Pension, paying a fixed amount to the bottom 70% of seniors aged 65 and older. What began as a targeted program for low-income seniors gradually expanded to reach its present form. Some assess that the current "bottom 70% of seniors" standard was a product of political compromise. When the predecessor Basic Old-Age Pension was introduced, the Grand National Party advocated 100% coverage for all seniors, while the then-ruling Uri Party pushed for 40 to 50% coverage. The fact that the coverage rate of the National Pension and occupational pensions was only around 30% at the time is also understood to have been taken into account.
As time has passed, there is a clear need to define the character of the Basic Pension, which many criticize as having become ambiguous. The nation must decide whether to make the Basic Pension more explicitly universal for all seniors (and if so, how to manage the fiscal costs), or whether to reshape it into a minimum income guarantee focused on low-income seniors who lack sufficient retirement income from the National Pension (and if so, whether society can adequately explain the reduced role of the pension for middle- and upper-income seniors). Explaining a cohesive combination of generosity at the bottom and restraint at the top may only become possible once the fundamental identity of the Basic Pension is clearly established.
<References Used for This Article>
- Basic Pension Adequacy Evaluation Committee. 2023. Basic Pension Adequacy Evaluation Committee Final Report and Meeting Materials.
- Ministry of Health and Welfare. 2024. Pension Reform Implementation Plan.
- Kim Do-heon, Lee Seung-hee (KDI). 2025. Directions for Reforming the Basic Pension Selection Method.
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