Korea Housing Finance Corporation "Automatic Succession to Pension Recipient's Spouse"... Launch of 'Trust-Based Housing Pension'

Residents of detached houses with jeonse deposits can also join
‘Housing Pension Guardian Account’ to prevent seizure also implemented

Comparison of Collateral Provision Methods for Joining the Housing Pension. Photo by Korea Housing Finance Corporation

[Asia Economy Reporter Song Seung-seop] Shim Hyun-sook (58, pseudonym) has been living on a monthly pension of 1 million won, received together with her husband, by subscribing to the housing pension under her husband's name. However, after her husband passed away last year, their children began to claim their inheritance shares. Shim opposes the full transfer of ownership but is worried that she might lose her housing pension benefits.

In the future, cases like Shim's, where there are concerns about the suspension of housing pensions, are expected to decrease. This is because measures to strongly protect the pension rights of existing housing pension subscribers will be implemented. The Korea Housing Finance Corporation announced that starting from the 9th, it will launch a ‘trust-type housing pension’ product and implement the ‘Housing Pension Guardian Account’ system, a seizure-protection account.

The housing pension is a policy where homeowners who meet certain requirements pledge their house as collateral and receive a fixed amount in the form of a pension during their retirement. The trust-type housing pension involves the homeowner registering the house under a trust contract at the time of subscription. Subscribers have pension rights and rights to reside, use, and benefit from the house according to the trust contract.

The existing housing pension’s ‘mortgage lien’ method required the surviving spouse to obtain consent from the children, who are joint heirs, to continue receiving the pension after the subscriber’s death. If even one child did not agree, the surviving spouse could not receive the housing pension. However, by using the trust-type housing pension, if the surviving spouse is designated as the post-beneficiary, the housing pension is automatically inherited by the spouse upon the subscriber’s death, enabling stable pension receipt.

It has also become possible to subscribe even if there is a lease with a deposit on part of the owned house. Residents of detached houses with jeonse (long-term deposit lease) had difficulty subscribing to the housing pension until now. On the other hand, with the trust-type, if the lease deposit is entrusted to the corporation, subscription to the housing pension is possible. The corporation also pays interest at the level of regular deposit rates on the transferred lease deposit, providing additional retirement income beyond the housing pension.

When subscribing through the trust method, customers are expected to save on taxes such as registration license tax compared to the existing mortgage method. Photo by Korea Housing Finance Corporation

The customer burden costs during the subscription process are also expected to decrease. In particular, the registration license tax cost borne by customers for providing collateral during subscription and succession processes is reduced compared to the mortgage lien method. Procedures such as inheritance registration for ownership transfer or mortgage lien changes after the subscriber’s death are also unnecessary.

Meanwhile, to further protect pension rights, a seizure-protection account will also be operated. By using the ‘Housing Pension Guardian Account,’ a pension-dedicated account, amounts up to 1.85 million won are protected from seizure. The 1.85 million won corresponds to the minimum living expenses under the Civil Execution Act for monthly payments. The Korea Housing Finance Corporation explains that even if unexpected situations occur in old age, the housing pension can be received stably.

President Choi Jun-woo stated, “With the launch of the trust-type housing pension and the Housing Pension Guardian Account, we have added peace of mind to retirement life,” and emphasized, “The corporation will strive to enhance product options and user convenience, including expanding choices for subscribers.”

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