Ruling and Opposition United on 'Basic Pension Increase by 400,000 Won'... Higher Chances of National Assembly Approval

Basic Pension Increase Efforts Begin in the Field
Attention on Whether to Confirm '400,000 Won Increase' Following Government Proposal
Expected Difficulties in Adjusting Eligibility and Scale

[Image source=Yonhap News]

[Asia Economy Reporter Park Jun-yi] As the opposition party has declared its intention to push for an increase in the basic pension during the regular National Assembly session, the likelihood of its passage in the Assembly has increased. The "basic pension of 400,000 won" increase is also a campaign pledge of the ruling party for the presidential election. However, there are differences between the government ruling party and the opposition party regarding the eligibility and amount of the basic pension, and since it may conflict with the government's sound fiscal policy, difficulties are expected until final approval.

According to political circles on the 13th, Lee Jae-myung, leader of the Democratic Party of Korea, recently expressed his intention to raise the basic pension from about 300,000 won per month to 400,000 won at a closed supreme council meeting. During his presidential candidacy, Lee pledged to increase the basic pension of 300,000 won per month, paid to 70% of seniors aged 65 and over, to 400,000 won per month and to abolish some reduction systems. However, it has been reported that in recent meetings, plans to expand the eligibility were discussed. The current proposals include increasing the basic pension for the bottom 70% income group and paying 200,000 won per month to the remaining 30%, or paying the current amount to all citizens aged 65 and over.

This direction broadly aligns with the pension reform plan announced by the government. According to the government plan, the Ministry of Health and Welfare will prepare detailed plans for raising the basic pension to 400,000 won by the first half of next year and aims to implement the increase starting in 2024. With consensus between the ruling and opposition parties, the possibility of the basic pension increase bill passing during this regular National Assembly session has increased.

However, there are differences in the implementation methods between the government ruling party and the opposition party's proposals for the basic pension increase. The scale of the increase may vary depending on the coordination process. While the opposition party is discussing expanding the eligibility, the government plan targets the bottom 70% income group, in line with President Yoon Suk-yeol's campaign pledge.

There are also differences in the reduction scale. Under the current system, the "National Pension-linked reduction" reduces the basic pension amount depending on the National Pension benefits received. President Yoon promised during his presidential campaign to "make fine adjustments such as reducing the National Pension-linked reduction so that people can receive even a little more basic pension," so adjustments may be made. On the other hand, Lee Jae-myung advocated during his presidential campaign for the complete abolition of couple reductions and reductions in old-age pensions for working seniors.

[Image source=Yonhap News]

Some argue that increasing the monthly basic pension payment by 100,000 won would significantly increase fiscal expenditure and fail to achieve the intended effect. According to a report titled "Public Pension Financial Outlook and Pension Reform Discussion Trends," submitted last month by Yoon Seok-myung, a research fellow at the Korea Institute for Health and Social Affairs, to the National Assembly Budget Office, if the basic pension payment is raised to 400,000 won per month, the total annual payment will reach 49.3 trillion won by 2030, an increase of about 12.3 trillion won compared to maintaining the current level (37 trillion won).

Especially if the eligibility is expanded beyond the current level, the payment amount will increase further. The government also increased the basic pension budget by 2.4 trillion won compared to this year in the 2023 budget submitted to the National Assembly, based on a payment of 322,000 won per person. Moreover, with the rapid acceleration of the depletion of the National Pension fund, the need for sustainable funding measures is continuously being raised.

As the possibility of a basic pension increase grows, demands for pension reform are also expected to rise relatively. Currently, the National Assembly's Special Committee on Pension Reform is at a standstill. As discussions between the ruling and opposition parties have slowed, Democratic Party members of the special committee have decided to hold separate discussions this week.

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