[Yoon Administration Economy] Gradual Increase of Elderly Basic Pension from 300,000 to 400,000 Won per Month

New Government Economic Policy Direction

President Yoon Suk-yeol is speaking at the New Government Economic Policy Direction Announcement Meeting held at the Corporate Growth Center in Pangyo 2nd Techno Valley, Seongnam-si, Gyeonggi-do on the morning of the 16th. 2022.6.16 [Image source=Yonhap News]

[Asia Economy Sejong=Reporter Son Seon-hee] The government will gradually increase the basic pension, currently paid at 300,000 KRW per month, to "400,000 KRW per month" in connection with the reform of the National Pension to alleviate elderly poverty. This is one of the key pledges made by President Yoon Seok-yeol during the last presidential election.

In addition, the government will significantly reduce the tax burden on retirees with long-term service by offering a 100% exemption on retirement income tax for those with over 20 years of continuous service.

On the 16th, the government announced the "New Government Economic Policy Direction (Gyeongbang)" which includes support measures for vulnerable groups. Bang Ki-seon, First Vice Minister of Strategy and Finance, stated, "We will implement productive, customized welfare centered on vulnerable groups to improve the quality of life for all citizens and strengthen solidarity with the international community from the perspectives of national economic security and practicality."

Besides raising the basic pension, the government also announced plans to expand social service-type and market-type jobs for the elderly to guarantee income in old age. Furthermore, the eligibility criteria for livelihood benefits will be raised from the current 30% of the median income to 35%, and the housing benefit eligibility will be gradually increased from the current 46% to 50% of the median income.

Regarding the recently highlighted issue of improving mobility for persons with disabilities, the government pledged to support approximately 5,000 special transportation vehicles (call taxis) by 2023. It will also include operating expenses for transportation support centers for vulnerable groups in the national subsidy program and will consider appropriate support measures based on the results of related research projects conducted by the end of the year. Additionally, the support targets will be expanded to include elderly patients under 65 with senile diseases (such as dementia and cerebrovascular diseases), and services such as care and temporary respite support will be provided to families of children with severe disabilities to alleviate caregiving burdens.

To support the stability of life and social participation of persons with disabilities, the government plans to strengthen income and employment guarantees through disability pensions, vocational rehabilitation, and job provision. Moreover, the criteria for dependent family members for the living adjustment allowance paid to low-income national veterans will be gradually abolished, expanding the number of beneficiaries to about 30,000 by 2025.

To prevent child abuse, the government will expand related infrastructure and strengthen education for mandatory reporters and response personnel. Child support for single-parent families will be gradually increased from the current eligibility of households earning 52% or less of the median income to those earning 63% or less.

Regarding housing welfare for low-income households, the government plans to supply 500,000 public rental housing units from 2023 to 2027. Relatedly, a "Housing Welfare Innovation Plan" based on customized welfare for each class and region will be prepared in the second half of this year.

Alongside this, the government will significantly expand the length-of-service deduction for retirement income tax. A 50% reduction will be applied for 10 years of service, and a 100% reduction for 20 years of service. The maximum payment amount for the Earned Income Tax Credit will be increased by about 10%, and the related asset requirements will be relaxed from less than 200 million KRW to less than 240 million KRW.