Pension lottery fever grips Korean masses
Fill your face in the blank. Although the prospect of a titanic lump sum payout is what usually draws lottery players, Korea's new Pension Lottery 520 is capitalizing on the ideas of prudence and caution.
Since the new lottery's debut a little over a month ago, it has become a runaway success, selling out the first batch of tickets -- 6.3 million tickets costing ₩1,000 each are issued each week -- in just four days.
Unlike the pre-existing (and still popular) Nanum Lotto’s method of cashing out lump sums, Pension Lottery 520 doles out its prize in monthly chunks over two decades.
The first drawing was held on July 6. That one of the lucky winners was a 32-year-old office worker who is now set for life served as fodder for the new lottery craze, inflaming the hopes of millions attracted by the promise of lifetime stability.
New design
The government lottery commission has taken into account the country’s changing economic condition and its impact on the people’s mental states by removing the potential danger of the lump sum win, he said.
“Unlike the regular lotteries that can often disrupt one’s life, the pension lottery ensures stability," said Kang.
It is common knowledge that lottery winners are often unprepared to handle the windfall when awarded a large lump sum. Many quit their jobs, ruin relationships with family and loved ones and rapidly find themselves in a downward spiral that leaves them worse off than before.
With the new payout structure, Pension Lottery 520 winners will be paid ₩1.2 billion in monthly dividends of ₩5 million over a span of 20 years, and are subject to a lower tax rate of 22 percent than the existing lottery’s 33 percent.
After taxes, the two first-prize winners receive approximately ₩3.9 million every month.
Two second-prize winners receive ₩100 million each.
₩2 trillion business
The first official lottery in Korea was the ‘House Lotto' (Jutaekbokgwon), launched in September, 1969.
Designed for low- and middle-income families, whose ultimate dream revolved around owning an apartment, the prize was tagged to the price of the average home at the time, and started at ₩3 million. It was raised to ₩10 million in 1978, ₩30 million in 1981 and ₩100 million in 1983 (adjusted for inflation).
The 2002 Nanum Lotto whipped up a collective frenzy that took several months to simmer down. The Korean public went gaga over relatively huge collective sums that seemed to spin many a Cinderella fairy tale.
Almost a decade in, Nanum Lotto still sells, posting upwards of ₩2 trillion in annual sales.
Universal human nature
According to La fleur’s 2010 World Lottery Almanac, cited by the Korea Lottery Commission, the global lottery market posted more than US$225 billion in sales in 2009.
So which citizens spend the most on lotteries per dollar earned?
In terms of the GDP weighted sales volume in 2009, Greece placed first with revenue from lottery comprising 1.55 percent of GDP. Italy and Spain came in second and third with 1.31 percent and 1.13 percent each.
With sales accounting for 0.26 percent of its GDP, Korea ranked 24th among more than 100 nations that sell lottery tickets.
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Dreaming away
Fueling the pension lottery’s sales further is the fact that the odds of winning are one in 3,150,000, or 2.6 times higher than the regular lottery.
“I’ve noticed how so many people purchase lotteries these days, my boss and colleagues, friends from other companies” says Chungha Lee, 30, an office worker at the shipbuilding industry. “Some get it on a regular basis, and others, including myself, purchase them after we've had an auspicious dream or at the end of a particularly grueling day at work.”
“It is a harmless hobby of sort that gives a person a little flutter in return for a pocket change,” says Kang from the Union Lottery.
