Top earners may be barred from senior stipend

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Top earners may be barred from senior stipend

A controversial government subsidy for seniors should only be provided to people in the bottom 70 to 80 percent income bracket, the People’s Happiness Pension Committee said yesterday. That would exclude the remaining 20 to 30 percent and be a step back from President Park Geun-hye’s oft-repeated campaign pledge to give 200,000 won ($179) a month to all Koreans aged 65 or above.

The committee, an ad hoc presidential advisory board commissioned to come up with ways of reforming the pension system, was announcing its recommendations for the basic senior subsidy as the country struggles to deal with the highest rate of senior citizen poverty in the Organization for Economic Cooperation and Development - 45.1 percent.

Under the blueprint for the subsidy announced by the presidential transition team earlier this year, all seniors would have been covered, with those in the top 30 percent income bracket eligible to receive 40,000 won to 100,000 won a month.

But with the changes to the plan announced yesterday, higher income earners would be left out completely.

“The members of the committee agreed that benefits for younger generations should not shrink in the aftermath of government efforts to alleviate poverty among the elderly,” committee head Kim Sang-kyun said during a press briefing at the Welfare Ministry yesterday. Kim added the committee paid particular attention to ensuring “the sustainability of the pension program” with the health of the state coffers in mind.

The committee suggested senior welfare payments should be determined based on monthly income and contributions to the national pension system. It also recommended that the same amount - 200,000 won - be given out to all senior citizens in the lower income bracket.

The committee added that the funds will entirely be drawn from taxes. In recent months there has been growing public concern, especially among young people, that National Pension Service funds would be used to cover the program.

President Park heavily stressed the need for better welfare policies for the elderly during her successful campaign for office.

Experts attribute Korea’s staggeringly high rate of elderly poverty to the late introduction of the National Pension Service in 1988, meaning the country still falls far short of other developed nations with long-running state-run pension systems. According to the committee, only around 30 percent of people aged 65 or older are currently eligible for pension benefits, leaving many other seniors economically dependent on their children or completely on their own.

The Welfare Ministry will draw up a final pension plan based on the recommendations by August and submit it to the National Assembly. The senior subsidy is slated to begin in July next year.

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