Key Highlights
- South Korea has proposed counting crypto holdings when determining eligibility for the country’s basic pension.
- Pension applicants would have to allow the government to check their crypto holdings and overseas financial accounts during the review process.
- The bill follows an audit that found nine people with more than 500 million won in overseas assets were still receiving the basic pension.
South Korea could soon change how it determines eligibility for its basic pension, with cryptocurrency holdings becoming part of the assessment. On Monday, Rep. Seo Young-seok, a member of the National Assembly’s Health and Welfare Committee, introduced a bill that would include crypto holdings and overseas financial assets when calculating a person’s income for the country’s basic pension.
According to a local report, the proposal is designed to close a gap in the current system and help ensure pension support goes to older people who truly need it.
Currently, South Korea reportedly mainly looks at assets such as land, houses, buildings, bank savings, deposits, stocks, and insurance when deciding if someone can receive the basic pension. However, large cryptocurrency holdings and money kept in overseas financial accounts are not fully counted. Because of this, some people who own valuable digital assets or large amounts of money abroad may still qualify for pension payments even though they have significant wealth.
How the new pension rules would work
If approved, cryptocurrencies and overseas financial assets worth more than 500 million won would be included when calculating a person’s recognized income. This amount matches the reporting standard already used under South Korea’s Act on International Tax Adjustment.
The proposal also introduces new requirements for basic pension applicants. Applicants would have to sign a consent form allowing the government to review information about their cryptocurrency holdings and overseas financial accounts.
In addition, the bill would give the Minister of Health and Welfare the legal authority to request information from virtual asset service providers and the National Tax Service when needed to review a pension application.
Audit exposed a gap in the system
The proposal follows findings from a performance audit released by South Korea’s Board of Audit and Inspection in March. The report found that, as of 2023, there were 624 people aged 65 or older who had reported overseas financial assets worth more than 500 million won. Among those people, nine were still receiving the country’s basic pension.
The audit concluded that differences in how various asset types are treated could affect fairness in the pension system. It reportedly recommended that the Ministry of Health and Welfare improve the system so that all major assets are considered during the review process.
Government already planned similar changes
The ministry had already started moving in that direction. In April, it announced plans to include overseas financial assets and cryptocurrencies when calculating recognized income for the basic pension. Rep. Seo’s bill would provide the legal changes needed to make that happen.
Explaining the proposal, Rep. Seo said the basic pension is funded through taxpayers’ money and exists to support older people whose retirement income is weak. “The basic pension can play its role only if it reflects all the assets you actually have, whether it is overseas or in coins,” he said.
He added that as the government works to improve support for lower-income citizens, it is important that crypto assets and overseas financial holdings are properly reflected in pension reviews.
According to him, this will help make sure government support reaches elderly people who need it the most, instead of those who appear to have low income while holding large amounts of wealth elsewhere.
Crypto’s growing role in pension investments
The proposal comes as some pension funds have already started investing in Crypto-related assets. For instance, pension funds in U.S. states, including Michigan and New Jersey, have invested in Bitcoin ETFs.
However, one of South Korea’s largest pension relief firms, Bumo Sarang, recently lost 32.7 billion won after investing 59.5 billion won in a leveraged Ethereum-themed ETF tied to Bitmine last year.
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