Article 1 of the Basic Pension Act (Purpose)
The purpose of this Act is to support the stability of the life of the elderly and promote welfare by providing a stable income base by paying the basic pension to the elderly.[1] |
South Korea introduced its Basic Old-Age Pension in 2008 as part of its pension system. According to the Ministry of Health, Welfare and Family Affairs, the Basic Old-Age Pension is "designed to enhance welfare of the elderly by providing a monthly pension payment to the elderly in need."[2] The pension was intended to benefit workers contributing to the National Pension Scheme.[3]
By 2012, the pension was only covering 16% of the minimum cost of living, and benefited 67% of Korea's population over the age of 65.[3] It was extended in 2014 to provide monthly allowances of approximately $179 (200,000 South Korean won - KRW) to people over the age of 65 in the bottom 70th percentile of income earned.[4] In 2014, approximately 4.9 million people benefited from this program.[4]
South Korea's old-age pension scheme provides lifetime cover for individuals aged 60 or older, provided they have fulfilled the minimum requirement of 20 years of contributions to the national pension scheme beforehand.[5] Those who have made a minimum of 10 years of contributions and who have reached the age of 60 are eligible for cover under a "reduced old-age pension" scheme.
Additionally, there is an "active old-age pension" scheme, covering individuals aged 60 to 65 who are engaged in income-earning activities. Those aged between 55 and 60 who are not engaged in income-earning activities are eligible for the "early old-age pension" scheme.[6] Around 60% of Koreans aged 65 and over are entitled to a benefit amounting to 5% of their past average income, receiving an average of KRW 90,000.[7]
Basic old-age pension schemes cover individuals aged 65 and older who were earning below an amount set by presidential order. In 2010, that ceiling was KRW 700,00 for a single person and KRW 1,120,000 for a couple, equivalent to around $600.00 and $960.00 respectively.[5]