Lee Chang-yong, the Governor of the Bank of Korea, noted that "37% of the elderly poor can escape poverty if they convert their assets into pensions."
The Governor said during his welcoming remarks at a joint symposium held on the topic "Poverty and Labor in a Super-Aged Society: Asking for Policy Directions" at the KDI conference hall in Sejong on the 15th, "If 35% to 41% of homeowners aged 55 and older enroll in home pensions, an annual cash flow of 34.9 trillion won will be generated."
He said, "As of 2023, the poverty rate among the elderly in our country is about 40%, which is the highest among OECD member countries." He added, "The poverty rate is based on disposable income (income that can be spent on actual living expenses), so any amount of assets like real estate does not count if it cannot be converted into living expenses, thus classifying them as 'the poor.'"
The Governor commented that "if the demand for home pension enrollment is realized, an annual cash flow of 34.9 trillion won will be generated" and emphasized, "Even if only half of that is consumed, an annual 17.4 trillion won in private consumption will be created, allowing more than 340,000 elderly people to escape poverty."
According to an analysis conducted by the Bank of Korea using a macro-econometric model, if all households with an intention to enroll participate in home pensions, South Korea's real GDP is expected to increase by 0.5% to 0.7%, and the elderly poverty rate is projected to decrease by 3 to 5 percentage points.
The Governor stated, "Many elderly individuals are involuntarily participating in the labor market to sustain their livelihoods" and noted, "The continued employment rate among the population aged 65 and older exceeds the OECD average by more than double."
He added, "To reduce the employment instability of the elderly, it is necessary to ease the excessive seniority-based wage system" and suggested, "Elderly individuals who have entered self-employment are also facing low revenue and high instability, so there is a need to expand stable wage labor opportunities instead of self-employment."