Elderly South Koreans suffer from rising household-debt-to-income ratios: BOK

South Korean people suffer from rising ratios of household debt to income, as more people are aging, due mainly to early retirement and the lack of an effective pension system, a report said Wednesday.

"People face rising household-debt-to-income ratios as they are getting older in South Korea, unlike other advanced countries," the Bank of Korea report said.

South Korea, Spain and the Netherlands were the only countries where people aged 75 and older have higher ratios of household debt to income than those aged between 65 and 74, the report said.

The report attributed the rising debt to South Koreans starting restructuring debts in their 70s, while their counterparts in the United States and Europe begin debt restructuring in their mid-50s.

Another reason is that many elderly South Koreans rent out houses to compensate for the low income provided by the fledgling pension system.

"Jeonse" home rental deposits are counted as debt when calculating the ratio of household debt to income.

Jeonse is a home rental arrangement unique to South Korea, where tenants pay a lump-sum deposit instead of monthly fees, and landlords return the full deposit at the end of the rental period, which usually lasts two years.

"South Koreans are unique in increasing assets rather than disposing of houses, while people in other advanced countries spend assets as they get older," the report said. (Yonhap)