The Lee Jae-myung government has selected support for 'financial asset and income formation by life cycle' as a national policy agenda. From ages 0 to 18, the plan is to enable the accumulation of up to 60 million won through the 'Our Children's Independence Fund,' and for those aged 19 to 34, to support the formation of capital through the 'Youth Future Savings Account' aimed at promoting economic independence. This is a 'savings' based social security scheme where the government and parents match contributions one-to-one. Similar asset formation support policies are implemented in Singapore and the United Kingdom. The Financial Services Commission, which is in charge of the policy, has begun designing the products.
According to the financial sector on the 27th, the Financial Services Commission plans to unveil the detailed requirements for the Youth Future Savings Account next month. A Financial Services Commission official noted, 'We have reflected the project cost in next year's budget proposal, and we are finalizing the detailed requirements with relevant ministries.' The Financial Services Commission is discussing the establishment plan for the Youth Future Savings Account with the Ministry of Economy and Finance, the Ministry of Employment and Labor, and the Ministry of Small and Medium-sized Enterprises and Startups.
President Lee Jae-myung promised the establishment of the Youth Future Savings Account, which matches approximately 25% of contributions made by young people in the 1 to 3 years of saving at maturity, during his presidential campaign. Its distinguishing feature is shorter maturity compared to the 'Youth Leap Account' introduced by the Yoon Suk-yeol government. The Youth Leap Account allows individuals aged 19 to 34 to save monthly for five years, with a maximum monthly contribution of 33,000 won added by the government based on salary levels, allowing for the accumulation of up to 50 million won. The Youth Leap Account will be discontinued at the end of this year.
The Financial Services Commission is also considering plans to establish the Our Children's Independence Fund. The Our Children's Independence Fund features a structure where the government and parents jointly contribute 100,000 won monthly to a fund account on a one-to-one matching basis, allowing participants to grasp a sizable amount of 50 million to 60 million won at maturity, including interest. The interest generated during the fund's operation is exempt from income tax, and the money contributed by parents will not incur gift tax, providing various tax benefits.
A similar program to the Our Children's Independence Fund is Singapore's Education Savings Account. All social security schemes in Singapore are based on savings. The Singapore government supports childcare and educational funds through a one-to-one matching method in the 'Child Development Account (CDA)' for children aged 0 to 6. The support amount varies depending on the number of children; for one child, the maximum support is 6,000 Singapore dollars (approximately 5 million won). From ages 7 to 20, funds are allocated to the 'Post-Secondary Education Account (PSEA)' to help accumulate assets for higher education. This money will be transferred to the 'Central Provident Fund (CPF)', similar to the national pension, upon reaching 30 and can be used to purchase dwellings.
While the intention to support asset formation by life cycle is compelling, the concern lies with the project cost. Given the substantial financial burden, it is expected that adjusting either the beneficiaries or the amount of support will not be easy. The National Assembly's Budget Office estimated that it would cost approximately 35 trillion won over five years. For this reason, the Ministry of Health and Welfare proposed to gradually expand the project by lowering the target beneficiaries to ages 8 to 17 and the support amount to 50,000 won.
The Financial Services Commission has also begun improving systems to increase the enrollment rates and amounts received in reverse mortgages to support stable retirement income. A reverse mortgage is a scheme where one can receive money in the form of annuity for a lifetime or a set period by using their house as collateral. To address the concentration of 70% of reverse mortgage enrollees in the metropolitan area, the Financial Services Commission is considering providing incentives such as increased amounts received when taking out a reverse mortgage on low-priced dwellings in rural areas.