The Youth Future Savings, a three-year, flexible-installment product that lets young people make deposits freely up to a monthly limit of 500,000 won, will launch in June. The government will match a portion of the amount deposited each month as a contribution.
On the 23rd, the Financial Services Commission held a pre-launch review meeting for the Youth Future Savings and released the eligibility criteria and detailed operation plans. Eligible applicants are ages 19 to 34, classified as youth under the Framework Act on Youth.
For those who have completed military service, the service period (up to six years) is deducted when calculating age. A young person who is 35 years old and served two years in the military is considered 33 after deducting the two years.
Youth Future Savings allows young people ages 19 to 34 to deposit freely up to a monthly limit of 500,000 won. Government contributions are added to deposits, and interest income tax is exempt. The interest rate is a fixed rate for three years, with the level to be finalized later.
Income criteria require meeting both a total salary of 75 million won or less (comprehensive income of 63 million won) or being a small business owner with annual sales of 300 million won or less, and a household median income at or below 200%. Government contributions vary by income level.
Under the general type, those with a total salary of 60 million won or less (comprehensive income of 48 million won) or small business owners with annual sales of 300 million won or less receive a 6% match on deposits. Workers at small and midsize companies with a total salary of 36 million won or less qualify for the preferential type, receiving a 12% match. For those with a total salary over 60 million won and up to 75 million won, only the non-taxation benefit on interest income is provided without contributions.
Assuming a 6% interest rate, the financial authorities estimated that depositing 500,000 won per month for three years would yield a maturity amount of about 20.82 million won for the general type (principal 18 million won, contributions 1.08 million won, interest 1.74 million won) and about 21.97 million won for the preferential type (principal 18 million won, contributions 2.16 million won, interest 1.81 million won). They measured the revenue effect at about 12% on a simple-interest basis for the general type and about 17% for the preferential type.
Starting in June, applications can be made remotely through participating financial institutions' apps. New subscribers will then be recruited twice a year, in June and December. Duplicate enrollment with the Youth Leap Account is not allowed. However, during the initial June enrollment period only, existing subscribers may switch over through a special early termination.
Unlike ordinary termination, refunds from terminating a Youth Leap Account include the government contribution on the subscriber's own deposits in addition to the prior payments to the Youth Leap Account. The non-taxation benefit on interest income is also maintained. After enrollment, there will be no separate ongoing review of income and sales requirements.
However, for preferential-type subscribers at small and midsize companies, a tenure requirement is in place to encourage continued employment. If employed at an SME for a total of at least 29 months up to one month before maturity, the preferential benefits apply for the entire period, and up to two job changes are allowed during the subscription period.
Early termination limits government contributions and tax benefits. If there are unavoidable reasons such as death, emigration, retirement, business closure, or illness, special early termination is allowed so that contributions and tax benefits can be maintained.