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Basic Old-Age Pension and financial wellbeing of older adults in South Korea

Published online by Cambridge University Press:  19 February 2014

EUNHAE SHIN  and
YOUNG KYUNG DO
EUNHAE SHIN
Affiliation:
Department of Economics, University of Southern California, Los Angeles, USA.
YOUNG KYUNG DO*
Affiliation:
Department of Health Policy and Management, Seoul National University College of Medicine, and Institute of Health Policy and Management, Seoul National University Medical Research Center, Seoul, Korea.
*
Address for correspondence: Young Kyung Do, Department of Health Policy and Management, Seoul National University College of Medicine, 103 Daehak-ro, Jongno-gu, Seoul 110-799, Korea. E-mail: ykdo89@snu.ac.kr
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Abstract

South Korea's old-age poverty rate is among the highest in the developed world. Confronted with the increasing demand for a social safety net for older people, the South Korean government introduced the Basic Old-Age Pension (BOAP) in 2008. The BOAP is a non-contributory, means-tested pension covering 70 per cent of the elderly population, with monthly benefits amounting to 84 kW (thousand Korean won, approximately equivalent to US $1) for singles and 139 kW for couples. Little empirical research has been conducted, however, to evaluate the effectiveness of the new pension programme in supporting the financial wellbeing of older people. Using data from the 2008–2010 Korea Welfare Panel Study, a panel data analysis is conducted to estimate the effects of the BOAP on three sets of financial wellbeing measures: financial difficulty, monthly consumption and overall financial satisfaction. The results suggest that the BOAP has beneficial effects on the financial wellbeing of older people by improving affordability of basic subsistence items such as heating and nutritious meals, particularly among the older-old group. However, the effects are limited to these few outcomes only; overall financial wellbeing and other important indicators remain unchanged.

Keywords

non-contributory pensionfinancial wellbeingSouth Koreaold-age poverty
Type
Articles
Information
Ageing & Society , Volume 35 , Issue 5 , May 2015 , pp. 1055 - 1074
Copyright
Copyright © Cambridge University Press 2014 

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