▪ The basic pension is paid to people aged 65 and over who are within the lowest 70% income bracket. It aims to ensure a consistent income for seniors, thereby stabilizing their standard of living and enhancing welfare.
▪ For 2023, the allocated budget for the basic pension’s fiscal expenditure totaled KRW 22.6 trillion, with KRW 18.5 trillion contributed by central government and KRW 4.1 trillion by local governments.
▪ Elderly households earn an average of 58.4% of the median household income, with a substantial portion derived from transfer income.
▪ On average, elderly households that benefit from the basic pension have a consumption propensity of 57.6%.
▪ Starting from the 60s age bracket, the average consumption propensity shows an upward trend.
▪ Elderly households with lower incomes tend to exhibit a higher average propensity to consume.
▪ In 2021, the growth in consumption attributed to basic pension payments represented 71.7% of the total pension payment value.
▪ The basic pension, a type of current transfer from the government, bolsters household income and, consequently, private consumption by enhancing the spending capacity of households.
▪ Basic pension payments, if channeled into consumption, can bolster GDP and subsequently impact tax revenues, underscoring the need for policy frameworks that acknowledge these economic dynamics.