Housing Pension Enrollment Criteria Raised to 'Housing Official Price 900 Million Won'... Passed Political Affairs Committee

Including Residential Officetels in the Housing Pension Program
Raising the Housing Pension Enrollment Limit from Market Price 900 Million Won to Officially Announced Price 900 Million Won

[Asia Economy Reporter Park Sun-mi] The price ceiling for homes eligible for the Housing Pension will be raised from the current market price of 900 million KRW to a publicly announced price of 900 million KRW (equivalent to a market price of about 1.2 to 1.3 billion KRW).

On the 25th, the Financial Services Commission announced that the National Assembly's Political Affairs Committee approved a partial amendment to the Korea Housing Finance Corporation Act at its full meeting in the morning. The amendment mainly includes expanding the Housing Pension eligibility to residential officetels and changing the price ceiling for Housing Pension enrollment from a market price of 900 million KRW to a publicly announced price of 900 million KRW.

The Housing Pension is a product that allows couples aged 55 and older to receive a fixed monthly amount in the form of a lifelong loan, using their owned home as collateral. Introduced in 2007 to support stable living in old age while continuing to live in their own home, it has become an alternative income source for the elderly, with more than 10,000 households enrolling annually.

According to the amendment, the price ceiling for homes eligible for the Housing Pension will be raised from the current market price of 900 million KRW to a publicly announced price of 900 million KRW. Approximately 120,000 households (as of 2019) who previously found it difficult to enroll due to rising inflation and housing prices will now be able to secure stable retirement income through the Housing Pension. However, even if a home valued over 900 million KRW market price is enrolled, the payment amount will be capped based on a market price of 900 million KRW (1.87 million KRW per month for a 60-year-old).

Additionally, the criteria will be changed to allow residents of residential officetels to enroll in the Housing Pension. About 46,000 elderly households living in residential officetels, which were previously ineligible as they were not considered 'housing' (as of the end of 2019), will now be able to join the Housing Pension.

Upon the subscriber's request, enrollment in the trust-type Housing Pension will also be possible. This allows the pension rights to be automatically transferred to the spouse if one of the couple passes away, ensuring the surviving spouse's stable retirement income. Until now, all heirs of the deceased subscriber had to agree for the spouse to inherit the pension rights.

To protect Housing Pension payments, a seizure-protection account will be introduced. The amount necessary for living expenses under the Civil Execution Act (1.85 million KRW per month) will be deposited into an account protected from seizure, supporting stable retirement life and safeguarding pension rights. Enrollment will also be possible for single-family and multi-family homes partially rented out under lease, and partial leasing of enrolled homes will be allowed, expanding the scope and security of the Housing Pension.

The amendment to the Korea Housing Finance Corporation Act is pending approval by the National Assembly's Legislation and Judiciary Committee and the plenary session. Once passed, it will be implemented sequentially after the State Council's approval. The price ceiling increase to a publicly announced price of 900 million KRW and the allowance of residential officetel enrollment will take effect immediately upon promulgation, while the introduction of the trust-type Housing Pension and seizure-protection account will be implemented six months after promulgation.

Legislation to ease the Housing Pension enrollment requirements was previously proposed in the 20th National Assembly but was not thoroughly discussed. However, as apartment prices have continued to rise recently, dissatisfaction has grown that the existing Housing Pension enrollment criteria do not reflect reality, leading both ruling and opposition parties to agree on the need for changes.

According to the Housing Finance Corporation, the number of Housing Pension enrollments recorded 5,124 cases from January to June this year. The numbers have stagnated annually with 10,308 cases in 2016, 10,306 in 2017, 10,237 in 2018, and 10,982 in 2019. Although the enrollment age was lowered from 60 to 55 years old starting April this year, expanding the eligible range by about 1.15 million households, the actual number of enrollments from April to June this year was 2,737, showing little difference compared to 2,660 cases during the same period last year.

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