An exploratory analysis of payoffs for the lifetime mortgage of farming assets and its policy implications

Abstract

This study discusses and calibrates a pioneered model of estimating the payoffs for the farming-asset pension (FAP), which is to comprehensively integrate the components of farming assets into the recently implemented farmland pension (FP) in South Korea. The FP was introduced first in the world so that farmland may be liquidated by the lifetime mortgage of farmland. However, it differs from conventional lifetime or reverse mortgages because its annuity program is implemented by the government according to the actuarial model whose variables are adjustable from the viewpoint of the elderly welfare. By introducing a simple standard of comprehensive farming assets into the FP model, the FAP model augments this social security measure, the step-by-step improvement of which is also expected to formulate the future policy implications of regional economic revitalisation as well as the elderly welfare for other countries.

Keywords

• farming-asset pension (fap)
• reverse mortgage
• rural elderly
• farmland