The South Korean government has announced significant reforms to the national housing pension system to strengthen financial security for the elderly. These changes are part of the ‘Housing Pension System Improvement Plan for the Age of 100,’ reflecting the need for more robust retirement support as the population ages rapidly and senior assets remain concentrated in real estate. The reforms aim to make the housing pension a core pillar of multi-layered old-age security for seniors. The Financial Services Commission (FSC) and Korea Housing Finance Corporation are leading these efforts to expand access and increase benefits for eligible citizens.
The policy changes will directly impact seniors considering or currently eligible for the housing pension, especially those with lower-value homes and vulnerable groups. Notably, average new applicants aged 72 with a home valued at 400 million KRW will see monthly payments rise from 1,297,000 KRW to 1,338,000 KRW. Support for low-income and single-home households is also enhanced, with increased preferential payments for homes valued under 180 million KRW. Additionally, initial guarantee fees are reduced from 1.5% to 1.0% of the home price, and the refund period is extended from three to five years.
The new measures will apply to all new housing pension applications submitted from June 1, 2024. The reforms include a slight increase in annual guarantee fees from 0.75% to 0.95% of the loan balance to offset the lower initial fee. Importantly, the requirement for applicants to reside in the mortgaged home is relaxed for unavoidable circumstances such as medical treatment, elder care, or moving into senior welfare facilities. Furthermore, after a pensioner’s death, children aged 55 or older can enroll in the housing pension using the same property without first repaying the parent’s outstanding loan.
Frequently asked questions include whether applicants must live in the mortgaged home at the time of enrollment; under the new rules, exceptions are allowed for specific unavoidable reasons. Another common question is about the impact on low-value home owners, who will now receive higher preferential payments if their property is valued under 180 million KRW. For further information, inquiries can be directed to the FSC Financial Policy Division or the Korea Housing Finance Corporation’s Housing Pension Department.
Metaqsol opinion: The South Korean government’s housing pension reforms are a targeted response to the challenges of an aging population and asset concentration in real estate. By increasing payments, reducing initial costs, and easing eligibility, these measures lower barriers for seniors and vulnerable groups. The policy’s focus on flexibility and expanded support is likely to boost enrollment and improve retirement security. Ongoing improvements and outreach will be essential to maximize the program’s impact.