From Next Month, Housing Pension Enrollment Age Lowered to 55... Lifeline for Early Retirement Living Expenses

[Asia Economy Reporter Oh Hyung-gil] Starting from April, individuals aged 55 and older will be able to join the Housing Pension program. This opens a path for early retirees in their 50s to secure living expenses by utilizing their owned homes.

On the 24th, the government approved an amendment to the Enforcement Decree of the Korea Housing Finance Corporation Act at the Cabinet meeting, which includes these changes.

The government first lowered the eligible age for joining the Housing Pension from the current 60 years to 55 years. If one spouse is 55 or older, they can continue living in their owned home (market value at the time of joining up to 900 million KRW) and receive a fixed monthly pension for life through the Housing Pension program.

With this system improvement, it is estimated that about 1.15 million additional households will be able to join the Housing Pension. As of the end of February, the cumulative number of Housing Pension subscribers totaled 72,000 households, with total pension payments amounting to 5.3 trillion KRW.

However, the monthly pension amount paid varies depending on the home price at the time of joining and the subscriber’s age. For example, if owning a home valued at 600 million KRW, joining the Housing Pension at age 60 results in a monthly payment of 1.25 million KRW, whereas joining at age 55 results in 920,000 KRW per month, a difference of 330,000 KRW.

If the home sale price at the time the Housing Pension ends (such as upon the subscriber’s death) is higher than the total amount of monthly pension payments and guarantee fees received, the remaining sale proceeds will be returned to the legal heirs. Also, early termination is possible if the subscriber repays the principal and interest of the monthly pension and guarantee fees during the subscription period.

A financial authority official explained, "Starting this year, the pension payment amount for new subscribers is being increased by an average of 1.5% compared to the previous year, which will help early retirees prepare for their retirement."

Additionally, from June, when receiving jeonse (key money deposit) loans through the Housing Finance Corporation, it will be possible to combine the jeonse deposit return guarantee with the loan.

This is expected to resolve the inconvenience for 630,000 people who receive jeonse loan guarantees annually and currently have to separately subscribe to jeonse deposit return guarantee products through other guarantee institutions, while also reducing costs.

The financial authorities plan to actively supply return guarantee products targeting single-family and multi-family houses, which have had difficulty using jeonse deposit return guarantee products through existing guarantee institutions.

Monthly Payment of Lifetime Housing Pension by Housing Price and Age (Source: Financial Services Commission)

This content was produced with the assistance of AI translation services.