Entrusting Farmland and Receiving Monthly Pension... Farmers' 'Secure Retirement'

Rural Development Corporation, Farmland Pension Popular... 180.9 Billion KRW Planned for This Year
Over 65 Years Old, Over 5 Years Farming Experience... Property Tax Reduction for Farmland Under 600 Million KRW
Up to 3 Million KRW Monthly Payment... Supports Elderly Farmers' Livelihood Stability

[Sejong=Asia Economy Reporter Moon Chaeseok]

#Kim, a 70-year-old farmer who cultivates rice in Ulsan, lives by receiving a monthly pension of 2.1 million KRW after pledging his farmland as collateral to the Farmland Bank. He has also paid off hospital bills and loans. Kim said, "I feel at ease because I can continue farming while receiving the pension, and above all, I am not a burden to my children."

As the farmland pension system gains popularity as a stable source of retirement income for farmers, the Korea Rural Community Corporation, the agency in charge, has decided to increase its funding. By pledging farmland to the Rural Community Corporation, elderly farmers can receive monthly living expenses, attracting significant interest.

The Rural Community Corporation announced on the 14th that it plans to invest 180.9 billion KRW in the farmland pension project this year, which is 33 billion KRW more than last year. Additional funds will be secured from the Farmland Management Fund operated by the Ministry of Agriculture, Food and Rural Affairs. The total operating scale this year will reach 2.8507 trillion KRW.

Introduced in 2011, the farmland pension is a project that provides monthly pension-style retirement living funds by pledging farmland owned by elderly farmers. Farmers can entrust their farmland to the Farmland Bank operated by the Corporation. Anyone aged 65 or older with more than five years of farming experience can join. They must own rice paddies, fields, or orchards within 30 km of their residence. However, the farmland must be actively used for farming. The maximum monthly payment is 3 million KRW. The pension amount can be chosen by the subscriber between 100% of the individual publicly announced land price or 90% of the appraised value.

Subscriptions to the farmland pension have steadily increased. Since its introduction in 2011, the cumulative number of subscriptions has exceeded 17,000 over the past 10 years. Especially in the last three years, the average annual growth rate has reached 28%. As of last year, the subscribed area was 9,453,710 square meters, which is 22 times the size of Yeouido.

The average subscription age is 74 years, and the average monthly receipt is 930,000 KRW. This means that by entrusting farmland to the Farmland Bank, one can receive 930,000 KRW monthly and continue farming.

The biggest advantage of the farmland pension is that even if one has not prepared for retirement, they can continue farming while receiving a pension. Also, even if the pledged farmland is not used for farming activities but leased out, additional income can be earned while receiving the pension. During the period of receiving the farmland pension, property tax is reduced for farmland collateral up to 600 million KRW. In July last year, a mechanism was established to protect pensions from third-party seizure up to 1.85 million KRW per month when using the Farmland Pension Keeper Account.

There are various product types. There is a lifetime type that pays during the subscriber's lifetime and a fixed-term type that pays for a set period. The lifetime type includes a fixed lifetime payment type that pays a fixed amount monthly, a front-loaded type that pays more during the first 10 years and less from the 11th year onward, and a lump-sum withdrawal type that allows occasional withdrawals within 30% of the total receivable amount when a lump sum is needed. The fixed-term type includes a fixed monthly payment for a chosen period and a management transfer type that pays more pension by agreeing to sell the subscribed farmland to the Corporation after the payment period ends.

Kim Insik, president of the Korea Rural Community Corporation, said, "Joining the farmland pension is like giving a stable retirement gift to elderly farmers who have devoted their lives to agriculture," and added, "I hope children encourage their parents to apply first."

Jeollanam-do Naju-si Green-ro, Korea Rural Community Corporation headquarters. (Photo by Korea Rural Community Corporation)