FINANCE

South Koreans withdraw money from retirement pensions to buy homes: data

By Byun Hye-jin
  • Published : Oct 12, 2021 - 15:13
  • Updated : Oct 12, 2021 - 15:15

A view of Seoul’s Songpa and Gangdong districts from Jamsil Lotte World Tower (Yonhap)
More South Koreans are dipping into their retirement pension pots to buy homes in expectation of future gain amid soaring housing prices, causing concern over the availability of secure retirement income, a lawmaker said Tuesday.

The number of people who pulled out their money from their retirement accounts early stood at 71,931 in 2020, up 79.4 percent from the 40,091 tallied in 2016, according to Financial Services Commission data submitted to Rep. Chun Jae-soo of the ruling Democratic Party of Korea.

The amount of money withdrawn surged accordingly, from 1.2 trillion won ($10 billion) to 2.6 trillion won in the cited period.

Of the people who opted for early withdrawal last year, 62.3 percent said they would use the funds to purchase homes or pay for rental deposits.

“The government needs to strengthen the social safety net that guarantees a humane life and doesn’t cost their retirement pension. We also need to check for any risks for after-retirement life that can be shaken by the price of the real estate they own,” Chun said.

Experts say the trend is a sad comment on society.

“Since housing prices are rising at the fastest pace in recent years, people seem to think owning a home is equivalent to how they prepare for their life savings. However, in the aging society, people need to save their retirement pensions and have actual cash they can use after they retire,” said Park Seung-hee, a professor at Sungkunkwan University’s social welfare department.

“It is the tragedy of tragedies that the place we live has become the most important symbol of wealth in Korean society,” Park added.