[Exclusive] "100 People Annually for 3 Years"... Pilot Project Introducing 'Public Trust' for Dementia and Elderly Asset Management

To Prevent "Economic Abuse" of the Elderly
Need for Legislation on Public Trusts
Financial Authorities to Promote Private Trusts... Accelerating Capital Markets Act Amendment

The government is set to actively promote the introduction of public trusts for asset management of middle-class and lower elderly individuals. This system targets middle-class and lower elderly people who find it difficult to use existing financial sector trust products, and is expected to function as a new social safety net in the aging era.

According to reporting by Asia Economy on the 13th, the government is considering introducing a public trust pilot project over the next three years, targeting a total of 300 people at a rate of 100 people per year, based on the results of the research service on the 'Establishment Plan for a Public Trust Business Model for the Elderly.' As the elderly population increases, who become vulnerable to asset management due to declining judgment and a more complex financial environment with age, the government included 'improvements to the trust system to respond to social risks such as dementia' in this year's economic policy direction.

The National Pension Service also commissioned a research service in 2023 on the necessity of introducing a public trust business model for the elderly. The business model establishment research service, completed at the end of last year, is a follow-up that contains the development and proposal of an actual business model. If the research service report’s suggestions are followed, this pilot project is likely to be designed to allow participation not only by dementia patients but also by elderly individuals who need support in asset management. In particular, middle-class and lower elderly people find it difficult to use private financial institutions, so national-level support is necessary. It is understood that the report also includes recommendations that related laws on public trusts should be established for this purpose.

The report proposes that this project should be implemented under the leadership of the Ministry of Health and Welfare, similar to the existing public trust pilot project for adults with developmental disabilities. However, unlike the developmental disability pilot project which involved about 120 people, the elderly pilot project mentions a gradual expansion of scale. The purpose is to secure information necessary for full-scale commercialization through the pilot project.

Public trusts focus more on safe custody and management rather than asset growth. Especially, preventing economic abuse targeting the elderly is a major objective. In the United States, about 1.3 million elder abuse reports are received annually, with economic abuse accounting for the largest proportion. Concerns have been raised that similar problems may arise in Korea as aging intensifies. However, inter-ministerial cooperation is a challenge for introducing public trusts. Even if the Ministry of Health and Welfare leads, cooperation with related ministries is essential. In fact, Singapore adopts a model where a nonprofit corporation under the Ministry of Health operates public trusts in cooperation with the Public Trust Department of the Ministry of Law.

The government will simultaneously promote the activation of private sector trusts separately from public trusts. For this, amendments to the Capital Markets Act are necessary. A Financial Services Commission official explained, "The currently proposed amendment includes provisions allowing institutions specialized in professional services such as medical and legal fields to perform trust duties together, and pushing forward this legal amendment is a major task this year." Earlier, in November last year, a bill led by Representative Kim Sang-hoon included provisions allowing trust duties to be entrusted to professional institutions such as accounting and tax firms rather than financial companies. While maintaining the positive listing method that enumerates trustable assets under the Capital Markets Act, plans to expand its scope are also being pursued.