600,000 Elderly People Have Their Basic Pension Reduced Due to Receiving National Pension Despite No Income

Recipients of Reduced Payments Linked to National Pension
9.08% of All Basic Pension Beneficiaries Aged 65 and Over
Average Reduction Amount per Person Approximately 83,000 KRW

Seoul Seodaemun-gu National Pension Service Seoul Northern Regional Headquarters.
[Photo by Yonhap News]

Last year, it was identified that approximately 600,000 elderly people aged 65 and over in the lower 70% income bracket had their Basic Pension reduced because they were receiving the National Pension. This has raised concerns that the system may be unfairly penalizing subscribers who have diligently paid into the National Pension.

According to data on the "Status of simultaneous recipients of Basic Pension and National Pension" received by Kim Seon-min, a member of the National Assembly's Health and Welfare Committee from the Ministry of Health and Welfare, the number of recipients whose Basic Pension was reduced due to receiving a certain amount or more of National Pension reached 591,456 last year. As the elderly population grows due to aging, the number of Basic Pension recipients has increased annually from 5,659,751 in 2020 to 5,970,359 in 2021, 6,238,798 in 2022, and 6,508,574 in 2023.

Even if receiving the National Pension, as long as the recognized income amount (the sum of income evaluation amount and income conversion amount of assets) falls within the lower 70% income bracket, one can receive the Basic Pension. Related to this, the number of elderly people receiving both the Basic Pension and National Pension simultaneously increased each year from 2,384,106 in 2020 to 2,650,036 in 2021, 2,909,733 in 2022, and 3,175,082 in 2023.

However, the Basic Pension system includes a "Basic Pension-National Pension contribution period linkage reduction mechanism," which reduces the Basic Pension if one receives a certain amount or more of National Pension. The number of recipients whose Basic Pension was reduced due to this mechanism was 421,713 in 2020, 389,325 in 2021, 482,479 in 2022, and nearly 600,000 at 591,456 in 2023. In 2023, recipients who had their Basic Pension reduced due to the National Pension linkage accounted for 9.08% of all elderly Basic Pension recipients (6,508,574) and 18.6% of simultaneous Basic Pension-National Pension recipients (3,175,082).

The amount reduced due to the National Pension linkage also continued to increase, from 29.245 billion KRW in 2020 to 27.616 billion KRW in 2021, 36.512 billion KRW in 2022, and 49.225 billion KRW in 2023. As of 2023, the average reduction per person among those subject to the National Pension linkage reduction was 83,226 KRW.

Assembly member Kim Seon-min stated, "This system, strongly promoted by the Park Geun-hye administration in 2014, has increased disadvantages for diligent National Pension payers, hindering long-term National Pension subscription," and promised, "I will strive to abolish the linkage reduction with the National Pension during pension reform discussions in the National Assembly."