The National Pension Service (Image courtesy of Yonhap)
SEOUL, Nov. 14 (Korea Bizwire) — South Korea’s National Pension Service (NPS) plans a sweeping overhaul of its emergency loan program for seniors, known as the Silver Loan, aiming to improve convenience and ensure that aid reaches those most in need.
According to a briefing the NPS submitted to the National Assembly’s audit at the end of October, the reform centers on two priorities: user accessibility and fair distribution of limited funds.
At present, only a few loan categories — such as rental deposits and funeral expenses for spouses — can be applied for through the pension service’s mobile app. Medical expenses, the most frequently requested category among older adults, still require in-person visits.
Under the revised system, seniors will be able to submit medical-expense loan applications remotely, easing the burden on those with mobility challenges.
The agency also plans to modernize its repayment notification system. Instead of relying on phone calls and physical mail when borrowers fall behind, the NPS will transition to automated alerts via text messages and mobile notifications.
At the same time, the NPS intends to tighten rules to prevent repeated borrowing that ties up limited resources. One key change would block borrowers from taking out additional loans for renewed leases in the same home after already receiving a rental-deposit loan — a measure aimed at reserving funds for first-time applicants facing urgent financial need.
The reforms follow a tumultuous year for the Silver Loan program. Designed for pension recipients aged 60 and older, the program provides up to 10 million won (about US$7,300) at low interest rates for medical expenses, rental deposits, disaster recovery, and funeral needs.
With the interest rate at just 2.51 percent in the third quarter — well below market levels — and eligibility expanded last year to include basic-livelihood beneficiaries, applications surged beyond expectations.
This summer, demand was so intense that the program’s 38 billion-won budget was exhausted by early July, forcing the suspension of new applications. The government intervened shortly afterward, with the National Pension Fund Management Committee approving an emergency injection of 25 billion won in August to resume lending.
The NPS said the upcoming reforms aim not only to stabilize the program in the near term but also to transform Silver Loans into a reliable financial safety net for the country’s rapidly aging population.
M. H. Lee (mhlee@koreabizwire.com)
