National Assembly "Regressive structure where the more you work, the more you lose" vs. Ministry of Health and Welfare "There is an error in the premise of combining property and basic pension"
The need to improve systems such as ‘basic pension that is given and taken away’ is a separate issue.
(Seoul = Yonhap News) Reporter Seo Han-ki = A fierce policy battle is taking place between the National Assembly and the government over the point that the more efforts one makes to make a living through work, the lower the welfare payment equivalent to earned income, which discourages the will to become self-reliant.
The starting point was the statistics presented by the National Assembly Research Service in its ‘2026 Government Audit Issue Analysis’. The lowest income household with a monthly earned income of less than 500,000 won that receives the basic living security livelihood benefit earned an average of 227,769 won per month, but 214,249 won was deducted from the living benefit, resulting in a reduction ratio of 94.1% to earned income, which was criticized as a 'regressive reduction structure'.
In response to this, the Ministry of Health and Welfare, the responsible ministry, issued an official explanation to the National Assembly and directly refuted it, saying, "It is a statistical distortion that overlooked the calculation method of the basic livelihood security system and an error in the premise."
◇ Ministry of Health and Welfare: “It is an optical illusion that simply compares the combined amount of property and basic pension with earned income.”
The key issue pointed out by the Ministry of Health and Welfare is the discrepancy between the numerator (living wage reduction amount) and the denominator (average monthly earned income).
The basic living security livelihood benefit is not simply deducted based on the earned income earned through work. The remainder is paid after subtracting the household’s ‘recognized income amount’ from the legal minimum security level. At this time, the recognized income amount that serves as the basis for deduction is the sum of not only the assessed income after earned income deduction, but also the 'income conversion amount of property' calculated by calculating monthly income from business income, public transfer income such as basic pension, real estate and financial property, etc.
In other words, the 214,000 won cut from households with the lowest income of less than 500,000 won per month is not only due to pure earned income, but is also the total amount cut by combining the minimum housing and financial assets held by the household and the basic pension.
The Ministry of Health and Welfare said, "The reduction in living allowance refers to the entire amount of recognized income, and calculating the ratio by simply comparing it with pure earned income starts from the incorrect premise that the income of the recipient household consists only of earned income," and added, "It is not reasonable to judge that the system is regressive by linking even the share reduced due to property or transfer income to earned income."
Looking at the actual deduction formula, if a senior over the age of 65 earns 220,000 won, the basic deduction of 200,000 won is first subtracted and an additional 30% of the remaining 20,000 won is deducted, so the living allowance reduced due to pure earned income is only about 14,000 won. The explanation is that the earned income deduction system itself is not regressive because it is a system in which the amount reflected after deduction increases proportionally as income increases.
◇ Even if you remove statistical illusions… Improving systems such as the ‘basic pension that is given and taken away’ is a task
As the Ministry of Health and Welfare counters, even if there are calculation problems with the '94.1%' figure, the issue remains that the system needs to be improved to increase the incentive for low-income seniors to work and preserve their real income.
A representative example is the conflict between the basic livelihood security system and the basic pension. Currently, the basic pension amount is 100% reflected in the recognized income when calculating living benefits, so if you receive a basic pension, your living benefits are reduced accordingly. This is the so-called ‘basic pension that is given and taken away’ problem.
The low earned income deduction standard for the elderly is also an issue. For young people, the basic deduction is 600,000 won plus an additional 30% of the remaining earned income, but for seniors over 65, the basic deduction is only 200,000 won and an additional 30% of the remaining amount is deducted.
The National Assembly Research Service points out that this structure can reduce the incentive for low-income seniors to work and make it difficult to actually preserve their income. On the other hand, the Ministry of Health and Welfare's position is that since deductions are applied to earned income itself, it is not appropriate to view the living allowance calculation structure as a 'regressive structure in which the more you work, the more you lose.'
In the 4th Comprehensive Plan for Basic Living Security (2027-2029) to be prepared by the government, measures to improve the system to increase the real income of low-income seniors, such as the relationship between basic pension and livelihood benefits and the level of earned income deduction for the elderly, are expected to become issues again.
