Monthly benefits from the Housing Pension to decline by an average 2.8%

starting with those applying for the Pension next February

-  No change will apply to existing pensioners and new applicants in January of next year  -

□ An adjustment in key variables for estimating monthly Housing Pension benefits as of 2013

- Housing price increased and interest rates lowered; life expectancy extended

Monthly benefits for new Housing Pension applicants will be adjusted next year, but existing pensioners and new applicants up to next January will be provided the same amounts of benefit as of now.

After receiving feedback on its plan, the Korea Housing Finance Corporation (KHFC) will adjust key variables for estimating monthly Housing Pension benefits. Its plan will be submitted to the Housing Finance Steering Committee on December 21 for a vote and if approved, take effect starting next February.

KHFC has requested a specialized external organization to recalculate major variables applied to the estimation of monthly Housing Pension benefits. With the recalculated variables as the basis, it will: (a) lower the long-term housing price increase rate from an annual 3.3% to 3.0%; (b) cut the interest rate for pension calculation from 6.33% per annum to 6.02%; and (c) replace the currently applied 2010 population mortality table with the 2011 version.

This will lead to a 1.1-3.9% decline (2.8% on average) in monthly benefits from fixed-rate pensions on general houses.

□ No change in monthly benefits for existing pensioners and new applicants up to next January

The recalculated monthly benefits will affect new applicants starting next February. Existing pensioners and new applicants up until next January, however, will receive the same amounts of benefit as determined at the time of their subscription to the Housing Pension.