Korea Rural Community Corporation to Reform Farmland Pension System
Allow Product Conversion and Early Repayment, Strengthen Pension Benefits Protection
[Sejong=Asia Economy Reporter Kim Hyunjung] Korea Rural Community Corporation announced on the 20th that it plans to reform the Farmland Pension system by lowering the subscription age to 60 years old and increasing the payment amount for low-income farmers, aiming to implement these changes next year.
First, the subscription age will be lowered from the current 65 years old to 60 years old, and the pension subscription criteria for farmland with prior collateral settings will be relaxed so that more farmers can benefit. Previously, only those with collateral amounts less than 15% of the farmland price could subscribe, but now, for cases where the collateral amount is between 15% and 30%, lump-sum withdrawal type subscriptions will be allowed on the condition that the existing loan amount is fully repaid after subscribing to the lump-sum withdrawal type.
Additionally, for low-income farmers such as basic livelihood security recipients who are eligible for livelihood benefits and long-term farmers with over 30 years of farming experience who subscribe to the lifetime fixed amount type, monthly payments will be increased by 5 to 10%. The farmland pension operates in two types: lifetime type, which pays until death, and fixed-term types divided into 5, 10, and 15 years.
The Corporation also plans to allow product switching and early repayment, and introduce sub-registration and trust registration methods to protect pension rights. Contract changes for product switching will be allowed once within 3 years after subscription, and early repayment of pension debt will be permitted once every 3 years upon the subscriber’s request to prevent cancellation due to debt burden.
To ensure that the spouse’s pension rights are fundamentally protected even upon the subscriber’s death, sub-registration on farmland collateral for the farmland pension will be made mandatory. Sub-registration is a method of attaching a sub-registration number to the existing registration to indicate that it is the same or an extension of the existing registration, publicly announcing that rights set by third parties on the collateral farmland have no effect. Trust registration is a method that can replace existing mortgage rights, allowing a third party to manage or dispose of certain property rights for the benefit of a specific person or for a specific purpose.
Furthermore, to provide high-quality farmland secured through the farmland pension project to young farmers, returnees to farming, and other farmers in need of farmland, the Corporation plans to improve products and launch new products by revising laws in 2022 and implement these changes step-by-step. Currently, farmland collateral must be sold to the Corporation only upon expiration of the payment period, but this will be improved to allow sale to the Corporation even upon the pension subscriber’s death. A new product will be introduced that pays an additional 5% of the monthly payment along with rental income when farmland is leased to the Farmland Bank upon subscribing to the farmland pension. A system will also be introduced allowing the Corporation to have priority purchase rights when farmland is disposed of to repay farmland pension debt in cash after pension payments end.
President Kim Insik said, "The farmland pension is a stable retirement security system provided to elderly farmers who have devoted their lives to agriculture," and added, "We will continue efforts to improve the system by continuously collecting and reflecting opinions from farmers and experts to help stabilize the retirement life of more farmers."
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