Many are saying that we now live in the era of ‘100-year life expectancy’. Others are saying this is one of the biggest social concerns, as aging society is coming without enough preparation. Regarding this matter, FSC’s Chairman, Kim Seok-Dong, delivered his address at ‘Retirement Strategy Forum 2012’ last month. (https://financialservicescommission.wordpress.com/2012/10/10/1047/)
At the Forum, Mr. Kim mentioned that FSC is working toward feasible measures to prevent the elderly from experiencing poverty. Then what is such a measure to support senior citizens in our society? One is ‘Reverse Mortgage’, called Joo Taek Yeon Keum (주택연금) in Korean.
Reverse mortgage is a pension program for the elderly with their own houses but not having cash income. Those homeowners can receive monthly pensions during their golden ages, if putting their houses as collateral.
Who are the senior citizens eligible for the pension? The elderly should be at least 60 years old as of the date of guarantee application. Also, the applicant should satisfy ‘one house per household’ requirement. That is, an elderly owning more than one property is not able to apply for the pension.
Then, let’s think about this case. Mr. Lee is 63-year-old and living in his own apartment in Seoul. He is living with his spouse, Mrs. Lee, whose age is 58. The apartment is under Mr. Lee’s name and this is the only property owned by him. Is he an eligible borrower for reverse mortgage?
It was not until this Tuesday (16th of October 2012) that he became a successful applicant for the pension. Why? According to the previous age requirement which was effective till Monday (15th of October 2012), ‘both’ homeowner and spouse should be over 60 years.
However, there were voices that this age requirement places too high threshold of eligibility. Taking this opinion account, FSC announced the partial amendment to Korea Housing Finance Corporation Act which eases the age requirement for reverse mortgage. Under the new requirement, only the homeowner should be over 60 years, regardless of his/her spouse’s age. This new measure came into effect as of this Tuesday when the partial amendment was passed at the Cabinet meeting.
FSC expects that this eased requirement will benefit more senior citizens by allowing residential stability and providing income during the golden ages. This is FSC’s effort to prepare for 100-year life expectancy era. I guess this is time for individual households to make their own blueprints for golden ages. Let your golden ages shine with the help of new policy measure and your back-up plan.