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.