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As pensions fall behind low-income stipends, experts urge reform

Published: 24 Nov. 2025, 18:14 Updated: 24 Nov. 2025, 20:17

The photo shows the National Pension Service office in Seodaemun District, western Seoul on Nov. 3. [NEWS1]

Average monthly pension payments have not only fallen below the living stipends low-income households receive under the National Basic Living Security Act, but the gap is also widening, a shift analysts say underscores the urgency of pension reform.

As of July this year, the average old-age pension payout stood at 679,924 won ($460), according to the Ministry of Health and Welfare and National Pension Service on Sunday. The maximum living stipend for a single-person household reached 765,444 won. The stipend first surpassed the pension average in 2023, ending years in which pension benefits stayed slightly higher.

“Regrettably, the pension is lower than the living stipend, which requires no contribution,” an NPS specialist said on condition of anonymity. “The pension should at least guarantee the minimum standard of living. Government support to increase pension levels is essential.”

In 2015, the system shifted to separate benefits for livelihood, medical care, housing and education. At that time, the living stipend for a single-person household was 437,454 won. The average pension payout was 484,460 won. For several years, the pension remained 10,000 to 20,000 won higher.

That changed in 2023. The stipend rose to 623,368 won, while the average pension stood at 623,000 won — a gap of 3,068 won. The difference widened last year and reached 85,520 won this year.

The old-age pension figures exclude special categories such as five-year benefits introduced during the system’s expansion in the 1990s, split pensions after divorce, and disability or survivor pensions. The living-stipend amount reflects the maximum payment for recipients with negligible income and assets.

The rise in the stipend reflects efforts by former President Yoon Suk Yeol and President Lee Jae Myung to strengthen social welfare. Starting in 2023, the government sharply increased the median-income threshold used to determine benefit levels. The threshold for single-person households rose even more.

The government also raised the qualifying base for the living stipend from 30 percent to 32 percent of the median income. After that change, the stipend for single-person households grew by 7 to 14 percent a year. Before then, it rose only 2 to 6 percent.

By contrast, increases in the average pension payout hovered around 3 to 5 percent. Pension benefits rise with consumer-price inflation, typically 1 to 3 percent. Benefit levels are also influenced by the three-year average income of contributors, known as the A-value. That value rose only 3 to 6 percent. Low-income regional subscribers account for much of the slow growth.

The gap between the two payments seems likely to widen. At the end of July, the government set the base for next year’s median income and stipend. The living stipend for single-person households will rise to 820,556 won in 2026.

The average NPS payout in December is expected to stay just above 700,000 won.

Experts say the government must strengthen the pension system. They recommend measures that expand contribution periods, including subsidies for low-income regional contributors and additional credit for military service, childbirth, parenting and education.

As of July, the NPS served roughly 7.26 million old-age pensioners. About 2.71 million of them receive less than 400,000 won per month. A large share are seniors aged 65 or older.

Even if they receive the full basic pension of 342,570 won, their combined benefits fall short of the 765,444 won living-stipend threshold. The basic pension is also reduced once NPS benefits exceed about 510,000 won.

The photo shows the National Pension Service office in Seodaemun District, western Seoul on Aug. 25. [NEWS1]

“Countries such as Germany and Sweden operate minimum or guarantee pensions,” said Yang Jae-jin, a professor of public administration at Yonsei University. “We should combine the NPS and the basic pension to meet a minimum standard. But we currently pay the basic pension universally at the same amount to about 70 percent of seniors. That approach must change.

“We should revise the basic pension eligibility to under-median income and reduce the universal scope. We should also raise payments for low-income seniors and remove the NPS’s income-redistribution mechanism so benefits scale with contribution.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY SHIN SUNG-SIK [[email protected]]