hankyoreh

By Choi Sung-jin, staff reporter

The basic pension program for poor people aged 65 or above will take effect on July 1, providing 100,000 to 200,000 won (US$98 to US$196) to the lowest earning 70% of seniors. The goals of the program, the government says, are to guarantee a stable income in old age and reduce poverty among the elderly. However, critics suggest that numerous issues need to be addressed before the basic pension system can ameliorate elderly poverty. One of these issues is finding a way to guarantee that elderly people receiving basic livelihood benefits will also receive the basic pension.

The Ministry of Health and Welfare announced on June 23 that it would begin accepting applications for the basic pension program on July 1. The program is available to those 65 years and older whose monthly income is less than 870,000 won (US$855) for a single-person household. (This sum takes into account assets, which are converted to income.)

Those already receiving the basic old age pension do not need to reapply for the new basic pension program. The first payment of the new basic pension will be made on July 25, after the Ministry has assessed which of the current recipients of the basic old age pension and new applicants for the basic pension are eligible to receive benefits.

The Ministry of Health and Welfare said that the reasons for implementing the basic pension program were to ensure old age income by creating a stable income base and to provide relief for poor elderly people. However, civic groups involved with welfare argued that the program could in fact cause a sense of deprivation in elderly recipients of the basic livelihood benefits, who represent the lowest earning 70% of elderly people.

Those selected as beneficiaries according to the National Basic Living Security Act receive seven categories of payments, including livelihood, residential, medical, and education. Among these, livelihood and residential assistance is paid in cash. If these people receive 200,000 won in basic pension, this would be regarded as income, with the livelihood allowance they receive being reduced by the same amount. As a result, among the bottom 70% of elderly in terms of income, ordinary seniors would receive up to 200,000 won more, while seniors who are recipients of the basic living allowance might not receive a single penny more.

There could even be cases in which receiving the basic pension could make people ineligible to receive the basic living allowance. Under the basic living security system, the point of the livelihood allowance is to raise the income of destitute households to the minimum cost of living (603,403 won, or US$592.69, per month, for a single-person household).

However, if such households switch from the basic senior pension, which pays 99,100 won at the most, to the basic pension, which pays from 100,000 to 200,000 won, the higher pension payment could result in them being assessed as earning more than the minimum cost of living and thus being ineligible for basic living benefits. For elderly people who were making ends meet through not just the cash payments but also the discounts on medical costs and electric bills provided by the basic living security system, being denied these benefits could threaten their very survival.

"The minimum cost of living defined in the basic living allowance insurance system is extremely low, which keeps the livelihood allowance from achieving its goal. Considering the situation of the South Korean public assistance program, increasing the basic pension payments would be more suited for the object of the National Basic Living Security Act and for the reality we face,” said Oh Geon-ho, joint chair of the operating committee for Welfare State That You Create.

“The government is holding to the irresponsible position of letting people choose between the basic pension and basic livelihood benefits. If the point of introducing the basic pension is to address the issue of elderly poverty, the government should stop badgering old desperate old people about making a choice, and just give them the basic pension,” said Kim Yun-young, secretary general for Korean People’s Solidarity Against Poverty.

The Ministry of Health and Welfare countered the livelihood payment based on the National Basic Living Security Act constitutes a supplementary benefit, which is intended to make up for the shortfall in the minimum cost of living. If the basic pension is added to this, the Ministry said, it would be double payment.

Instead, the Ministry announced that seniors who are excluded from the basic living benefits because of the higher income resulting from the new basic pension system can keep receiving medical benefits for two years after the basic pension system takes effect. The Ministry believes that around 5,000 elderly people could be affected by the new system.

Please direct questions or comments to [english@hani.co.kr]