Offspring pensions and reverse mortgage

At Songsan village of Janghowon County in Gyeonggi Province, there is a monument praising a family named Park for tending its parents with utmost filial piety. It is said that during the reign of King Jeongjo of the Joseon Dynasty, the father of a man named Park Jin was seriously ill. To save his father, Park cut his finger and fed his blood to his father. The son also treated his mother well. When his mother said she wanted to eat peaches in the middle of winter with heavy snow, he asked all around the village and got her five peaches. How would this sound to today`s children?

There is a saying that people should be careful about three things in life -- making a huge success at an early age, losing one`s wife at a middle age and being poor at an old age. In South Korea, one of two senior citizens in general is in poverty. The country shows the highest elderly poverty rate among member economies of the Organisation for Economic Cooperation and Development. The traditional sense of filial duty is becoming increasingly thinner. Twenty years ago, nearly 90 percent of South Koreans thought that supporting elderly parents is a family`s responsibility. The rate fell to less than 40 percent in 2012. Instead, more and more people think that their society should be responsible for supporting the elderly.

On Wednesday, the Supreme Court made a ruling that recognized the so-called "offspring pension." It ruled that a son who covered the living expenses for his elderly mother for a long time did not have to pay inheritance tax on his mother`s house. He sent 1.2 million won (1,100 U.S. dollars) of living expenses for his mother every month for 10 years and repaid her debt of 62 million won (56,700 U.S. dollars) that she had borrowed by putting up her apartment house as collateral. Later, he inherited the house whose tax base was 160 million won (146,000 dollars). When he was levied nearly 22 million won (20,000 dollars) in inheritance tax, he filed a lawsuit. The top court said that it considered that case as a transaction similar to reverse mortgage, rather than gift.

There is an English proverb saying that the world`s worst pension is offspring pension. South Korean baby boomers who were born in the 1950s and 60s call themselves the last generation supporting their parents and the first one not supported by their children. Private tutoring costs parents an arm and a leg, but college-graduated children are jobless and remain dependent on their parents. Will the "offspring pension" scheme, under which parents receive living expenses from their children in return for handing over their houses, make things a little easier for the baby boomers?