Salaried workers dismayed social welfare benefits exceed NPS payouts

A National Pension Service (NPS) office in Seoul / Yonhap

Kim Ji-hoon, 41, an office worker in Seoul, says he couldn’t help but feel speechless at the news about the country’s state-paid monthly subsidy for the poorest households exceeding the National Pension Service (NPS)'s average monthly payout.

“I’ve been paying a monthly NPS premium for 17 years, since I began my job at a company in Seoul,” he said. “The news I might receive less than someone who paid nothing at all was unsettling to put it mildly.”

Kim said he has nothing against government welfare programs designed to protect society’s most vulnerable.

However, he expressed surprise that low-income groups could receive more in monthly income than him, since decades of his contributions to the state-run pension system do not guarantee his post-retirement well-being.

“I mean, the monthly premium is taken from salaried workers in the form of withholding tax, meaning I cannot refuse to subscribe to it even when I don’t want to. The fact that vulnerable groups that have not made any contribution at all may receive more than me is just not right.”

He said he is not demonizing low-income groups but trying to make sense of the long-term credibility of the pension system itself. “It’s about whether contributing for decades still makes sense for salaried workers like me."

Similarly, office worker Lee Jae-ha says the news was discouraging and noted, “The cost of everything is rising except my monthly paycheck.”

Housing, food and living expenses overall are all going up in price, he said, and now social benefits are increasing faster than the state-run pension that he is obliged to participate in.

“I think I speak for almost all salaried workers my age when I say post-retirement NPS payouts will fall far short of what we need to maintain a minimum standard of living. I mean, what’s the point of paying the monthly premium in the first place if decades of contributions leave us less well-off than those who the government considers poor and in need of state support?” Lee said.

Kim and Lee are among an increasing number of salaried workers expressing frustration over the imbalance in government welfare policies.

According to the NPS and the health ministry, the monthly pension payout averaged 679,924 won ($459) as of July, while the monthly government allowance for the country’s poorest single-person households without income or assets stood at 765,444 won.

The difference between the two is set to widen next year due to the ministry-led government consultative body’s decision in July to increase next year’s monthly allowance to 820,556 won.

In contrast, the pension payout is likely to increase to slightly over 700,000 won.

Under both the former President Yoon Suk Yeol and current Lee Jae Myung administrations, social welfare programs were expanded, leading to 7 to 14 percent increases in monthly allowances for the poorest single-person households.

This contrasts with the NPS payout increase, between 1 and 3 percent, which is tied to the inflation rate. As of July, over 7.26 million people received monthly NPS pension payouts.