Office worker Lee, 34, who is set to marry in December, canceled the Youth Leap Account she opened in July 2023 for the purpose of buying real estate in the Seoul metropolitan area this August. She judged that securing a home as soon as possible would be more advantageous for asset building than maintaining the account until maturity in 2028 to save 50 million won. Lee said, "I chose to buy rather than rent on jeonse because I think home prices will keep rising."
Cases of canceling the Youth Leap Account, which the government set up to help young people build assets, are increasing. Many think investing in real estate or stocks will help them save money faster than the Youth Leap Account, which has a savings-deposit structure. The strict conditions for receiving the maximum benefits are also cited as a reason for cancellation.
According to the Korea INclusive Finance Agency (KINFA) on the 20th, since its introduction in June 2023 through the end of October this year, 443,000 out of 2,425,000 people (18.2%) who opened Youth Leap Accounts terminated their contracts early. Of these, nearly half—209,000—canceled between January and October this year.
In October alone, 34,000 people canceled their contracts, 10 times the number in October last year (3,000). This is the first time monthly cancellations have exceeded 30,000 since May last year (33,000).
The Youth Leap Account launched by the Yoon Suk-yeol administration is a product in which, if you deposit up to 700,000 won per month for five years (a total of 42 million won), the government pays a contribution based on income and returns up to 50 million won at maturity. The annual interest rate is up to 9%, higher than savings-deposit rates currently offered by banks. Only young people ages 19 to 34 with total salary in the immediately preceding year of 75 million won or less, or composite income of 63 million won or less, can enroll.
There is also criticism that the conditions for receiving the maximum benefits are stringent. Young people who pay 700,000 won a month do not get the maximum rate, while those who can receive the maximum benefits have lower pay and find it hard to contribute 700,000 won a month.
According to a youth finance status survey the Korea INclusive Finance Agency (KINFA) released in March, 39% of 177 people who canceled cited "unemployment or reduced income" as the reason. Responses saying they canceled because they urgently needed funds accounted for 33.3%.
The Lee Jae-myung administration plans to launch the Youth Future Savings in June next year. The Youth Future Savings has a three-year payment period and an annual interest rate of 12% to 16%. The enrollment condition was tightened to annual income of 60 million won or less.