[2021 National Audit] Kim Byung-wook "Rapid Increase in Housing Pension Cancellations... Redesign Needed"

[Asia Economy Reporter Kim Jin-ho] The housing pension, which has established itself as a means of securing retirement life for retirees, has recently seen a sharp increase in cancellations due to fluctuations in housing prices. In response, the political sphere has raised concerns that alternatives to prevent cancellations of the housing pension need to be researched and the system redesigned.

On the 18th, Kim Byung-wook, a member of the Democratic Party of Korea, urged the preparation of alternatives to prevent the rapidly increasing cancellations of the housing pension.

The number of housing pension subscribers has exceeded ten thousand annually, recording a cumulative total of 88,752 subscriptions by September this year. In particular, with the passage of the “Housing Finance Corporation Act,” which lowered the subscription threshold by expanding the eligible property price to 900 million KRW last year, an additional 1,333 citizens subscribed.

The problem is that cancellations have also surged sharply due to recent fluctuations in housing prices. According to the Housing Finance Corporation’s “Annual Housing Pension Cancellation Numbers” data, cancellations numbered 1,257 in 2017, 1,662 in 2018, and 1,527 in 2019, but increased significantly to 2,931 in 2020 and 3,185 by September this year.

By region, Gyeonggi-do recorded the highest number of cancellations with 1,242 cases by September this year, followed by Seoul with 825, Busan with 261, and Incheon with 209. Until 2019, Seoul had more cancellations than Gyeonggi-do, but since last year, cancellations in Gyeonggi-do have increased significantly, surpassing those in Seoul.

Rep. Kim said, “For citizens whose sole asset is a single house, the housing pension plays an important role in securing retirement, yet currently, the pension amount is determined based on the housing price at the time of the initial contract. Since fluctuations in housing prices or inflation rates are not reflected midway, cancellations surged significantly last year and this year when asset prices soared amid abundant liquidity due to COVID-19.”

He added, “Although it is not easy to change the monthly pension amount, citizens who lack immediate retirement funds cannot be indifferent to monthly payment fluctuations. As the housing pension has established itself as a reliable welfare policy for stable retirement life, it is necessary to redesign the system through research to prevent cancellations caused by housing price fluctuations.”