The Ministry of the Interior on Wednesday said that it would start accepting applications for a trial reverse mortgage program by May at the earliest, with the aim of providing financial assistance to elderly people not eligible for pensions.
The trial program will select 100 people aged over 65 to receive a monthly lump sum to help support them in their retirement through a reverse mortgage program during a five-year trial period, the ministry said.
“There are major flaws in the design of the current senior citizens’ welfare pension system that leave some elderly people in need, which is why we have come up with the new reverse mortgage system,” Minister of the Interior Lee Hong-yuan (李鴻源) said on Wednesday.
For example, some senior citizens are not eligible to receive a pension because they own houses with a value higher than the threshold for applying for low-income pensions, despite them not having sufficient funds to meet their daily expenses, Lee said.
Based on the new reverse mortgage program, senior citizens are required to sign a contract that will transfer ownership of their property to the government after they pass away in exchange for a monthly pension for the rest of their lives.
The monthly pension would be assessed according to the applicant’s gender, age and the value of their property, he said.
For example, a 70-year-old man owning a property worth NT$10 million [US$337,000] may be eligible to receive a pension of NT$34,800 per month, whereas a woman of the same age may only receive NT$30,300 a month for a property of the same value, Lee said.
This is because the life expectancy of women is longer, he said.
Also, the more a property is worth, the more the senior citizen may receive as a monthly pension, he added.
However, there are certain criteria that an applicant must meet to take part in the program.
Applicants cannot have any legal dependants, such as a spouse or children, said Chien Hui-chuan (簡慧娟), director-general of the ministry’s Department of Social Affairs.
They must independently own their property and the value of the property cannot exceed the threshold to qualify as a medium-income family, Chien said.
“Since this is a new policy, we are limiting the number of participants to 100, and the application period for the trial phase will start between May and July and last until 2018,” she said.
The number of people allowed to take part in the trial could be adjusted according to the number of qualified applicants.
A decision on whether the program would continue would be made at the end of the five-year trial period, she said.