Posted November. 17, 2005 07:58,
It is predicted that senior citizens over 65 years old possessing homes valued under 300 million won (approximately 400 million won at market value) will be able to place their homes as security in order to receive regular monthly payments until death.
In addition, tax benefits, including property tax benefits, are expected to be granted to seniors as well.
The Korea Institute of Finance (KIF) presented the relevant report, Basic Plan for a Revitalization Program on November 16 at the Bank Assembly Hall in Seoul.
This program, which the Ministry of Finance and Economy had requested the KIF to research in relation to problems linked to an aging society resulting from the falling birth rate, will be used as a basis for amendments to laws which are expected to become effective starting in 2007.
According to the program, a basic lifetime security benefit plan will be instituted by the government through the Korea Housing Finance Corporation (KHFC), which will directly put up the security. This basic lifetime security plan will extend the length of subscriptions until the death of members, giving it a similar quality to insurance.
Although currently financial firms sell benefits, because they expire after only 10 to 20 years, the actual results are unsatisfactory.
In order to be eligible to subscribe to the government instituted basic security benefit plan, one must be over 65 years old, and benefits are restricted at one residence per household for property valued under 300 million won.
As the program is aimed to act as a social security for those in the low income bracket, holders of large residences or luxury residences will be excluded from the plan.
The monthly loans increase according to age and home value.
A mixed model lifetime provision policy is also planned to grant favorable loans that can be received all at once for those who need large sums of money for items such as medical expenses or childrens weddings.
KIFs senior researcher Kang Jong-man stated, We have designed a plan so that people over 65 years old who own homes valued under 300 million won will receive one million won per month, and estimated, Approximately 320,000 households in the metropolitan areas and big cities alone will receive benefits.
Furthermore, the plan will deduct payments for interest free loans from income, and it will exempt eligible members from property taxes.