Joseyeon "Jutaekyeongeum, Possible to Contribute to Alleviating Elderly Poverty... Support Should Be Expanded"

[Asia Economy Sejong=Reporter Son Seon-hee] Amid the deepening trend of aging population, "elderly poverty" has emerged as a social issue, and a national research institute has suggested that housing pension could be a short-term solution. It pointed out the need to increase support for housing pension subscribers, whose numbers are disproportionately low compared to private pension subscribers.

On the 1st, the Korea Institute of Public Finance published a report titled "Tax Support Policies for Retirement Income Formation" and stated regarding housing pension that "it can function as an effective support measure for the elderly income-deficient group until the public pension system matures," adding that "expansion of support measures such as increasing property tax reductions and capital gains tax exemptions can be considered."

Housing pension is a reverse mortgage product where monthly payments are received for a certain period or for life by using the owned house as collateral. Eligible applicants are those who own a house with a publicly announced price of 900 million KRW or less, with at least one spouse aged 55 or older.

Korean elderly have the characteristic of having both a high poverty rate and a very high home ownership rate. The intention is to encourage subscription to housing pension to alleviate elderly poverty, especially among those not enrolled in public pensions or low-income groups.

According to data analyzed by Jeon Byung-mok, senior research fellow at the Korea Institute of Public Finance and author of the report, private pensions receive tax support of 11 to 15 KRW per 100 KRW of pension income, whereas housing pensions receive only about 1.6 to 2.2 KRW. Despite similar objectives of pension policies, the difference in tax support amounts is excessively large.

Senior Research Fellow Jeon pointed out, "The high elderly poverty rate stems from the immaturity of the National Pension system and the high exemption rate from contributions, reflecting the low inclusiveness of public pensions," adding, "Due to the relatively short introduction period of the National Pension, it does not function as a source of retirement income for the current elderly." He also forecasted, "Despite the high poverty rate among elderly households, the proportion of households owning real estate is high, so the housing pension has considerable potential to alleviate poverty." As a specific measure, removing eligibility restrictions such as the existing 'one household one house' and 'publicly announced price of 900 million KRW' was mentioned.

However, Senior Research Fellow Jeon added, "(Expanding support for housing pension) is support for the property-owning class, so limits on the scale of support are still necessary."

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