Page 390 - 2019 6th AFIS & ASMMA

And the reason for this, most of all, is that Korean seniors have much
Let me begin with the rapid demographic changes facing in Korea
now. As you can see, Korea is aging very fast due to low birthrate and
rising life expectancies. In 2000, Korea entered the aging society, where
population aged or 65 or older took up 7%. And last year, we came on
aged society when that figure reached 14%. Moreover, in 2025, in six
years from now, we are expecting Korean society will be classified as a
super-aged one. So indeed Korea is aging very fast, faster than any other
countries. It is expected to take only 26 years to go from aging society to
a super-aged one.
To compared with other countries; for France, it took 154 years, and in
the United States, 94 years. And even for Japan, which has been severely
affected by shocks of rapid population aging, it took 36 years. So given the
fact that the elderly will account for one fifth of the total population in six
years, how they can live their later lives is a serious challenge both for our
society and our economy. And unfortunately, we have been poorly prepared.
Many seniors are suffering from poverty after retirement; according to the
2016 OECD report, the poverty rate of seniors in Korea is surprisingly 47%.
It is almost four times higher than the OECD average.
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less support from the government. Korea lagged behind other countries
in the introduction of its National Pension Scheme, which was adopted
in 1988 only for employees, then the coverage in 1998 to include all
people. So about 80% of the pension subscribers has paid in for less than
20 years and the amount the monthly annuity income from national
pension plan is just $500. As a result, it consists less than 30 percent of
the post retirement income, which is only a half of the OECD averaging
over 60 percent. But fortunately, most seniors are homeowners. While
overall home ownership rate is 58 percent, for seniors, the home
ownership rate is much higher, 76 percent. So by converting the real
estate into cash flow, many seniors have additional income they need for
their later lives. So in this sense, the reverse mortgage is a very effective
solution in Korea to poverty in retirement, as well as easing the financial
burden on the government. Session III
Now I'd like to briefly explain what Korea Housing Finance
Corporation is doing to achieve this. We have been contributing to
enhancing the welfare of people by providing best housing finance
services. As one of the services, we provide guarantees for the seniors'
reverse mortgage loans, so that they can have additional income to spend
for their daily lives. So for this purpose, in 2007, we raised the fund
called a reverse mortgage guarantee account with government grants
and contributions from financial institutions. And we studied the reverse
mortgage businesses with 10 million dollars in that account at the time.
In the first year in 2007, we had only 515 senior subscribers, but with
the baby boomers are starting to retire, the number of reverse mortgage
subscribers is increasing rapidly.
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