Raising basic pension is the solutionThe basic pension system implemented in July 2014 is in its fourth year of operation. The basic pension helps alleviate poverty and seek stable living for the senior citizens who could not prepare for retirement themselves while supporting their children and parents.
Currently, most senior citizens with the bottom 70 percent of the income, 4.85 million people, receive 206,050 won ($190) monthly.
The satisfaction rate of the seniors who receive the basic pension is high. A survey by the National Pension Research Institute on the basic pension recipients shows that 90.2 percent of the respondents said that the basic pension was a help to their living.
Nevertheless, the lives of the seniors in Korea are still hard. The poverty and suicide rates among seniors are highest among the OECD member countries, and the elderly poverty rate that had been decreasing until 2015 went up in 2016 to 46.5 percent.
The government announced a plan to reinforce the income after retirement and alleviate elderly poverty by increasing the basic pension to 250,000 won in 2018 and 300,000 won in 2021. Opinions on the government plan to increase the basic pension are mixed. Some say that the basic pension needs to be increased to help seniors with stable living while others say the continued funding would be a challenge. What comes first?
The national pension that should cover the income after retirement in Korea is not enough for stable living for the senior population, as average monthly payment is mere 380,000 won, and only 32.3 percent of the citizens over age 60 receive pension.
Then, is financial sustainability of the public pension spending at a worrisome level? As of 2011, the OECD average spending of public pension for senior citizens to GDP is 7.9 percent, while Korea’s spending is mere 2.2 percent. Rather than worrying about financial sustainability from increased basic pension, we need to prioritize establishing a system that works to help stabilize seniors’ living conditions. It is the reason why the basic pension needs to be raised to 300,000 won.
*Acting president of the National Pension Research Institute