[Changes in 2022] Full Support for Youth... Launch of Hope Savings with Additional 4% Interest Rate

Government Publishes 'Changes Starting from 2022'

[Sejong=Asia Economy Reporter Moon Chaeseok] The government will continuously implement youth policies, including launching a Youth Hope Savings product in the first quarter of next year that offers an additional 4% annual interest rate. Besides savings, a youth-type long-term fund income deduction system will be implemented, allowing a 40% income deduction on contributions up to 6 million KRW annually. Additionally, a new Youth Job Leap Incentive program will be launched to support wages for up to one year if small and medium-sized enterprises hire youth and maintain their employment for more than six months.

The government included these youth policy measures in the booklet "Changes in 2022," published on the 31st.

In the first quarter of next year, the Youth Hope Savings will be launched targeting youth aged 19 to 34 with a total salary of 36 million KRW or less or a comprehensive income amount of 26 million KRW or less. This is a two-year maturity savings product with a monthly limit of 500,000 KRW, which provides an additional 2-4% savings incentive on top of the market interest rate. Assuming the market interest rate is around 2% annually, the final interest rate will be approximately 6% per year.

An interest income tax exemption system will also be newly established. If subscribed to the Youth Hope Savings, interest income received through the savings (with an annual contribution limit of 60 million KRW) will be exempt from taxation. This applies to subscriptions made between January 1 and December 31 next year, and interest income received until December 31, 2024.

To support asset growth, a "Youth-type Long-term Fund Income Deduction" system will be introduced. Youth aged 19 to 34 with a total salary of 50 million KRW or less or a comprehensive income amount of 38 million KRW or less who subscribe to a long-term fund can deduct 40% of their contributions (up to 6 million KRW annually) from their comprehensive income. This applies to subscriptions made between January 1 next year and December 31, 2023, for long-term funds with a subscription period of 3 to 5 years.

To assist entry into the labor market, wage support for hiring companies will also be expanded. Starting January next year, the "Youth Job Leap Incentive" program will be implemented. If a small or medium-sized enterprise hires a youth facing employment difficulties as a regular employee and maintains employment for more than six months, it will receive 800,000 KRW per month in wage support for up to one year.

Military personnel salaries will also increase by 11.1% to 676,100 KRW from this year's 608,500 KRW. This is about 50% of the 2017 minimum wage (1.35 million KRW). Corporals will receive 610,200 KRW, corporals first class 552,100 KRW, and privates 511,000 KRW.

Among the Military Tomorrow Preparation Savings paid upon discharge, the government will support one-third of the principal and interest, including the soldier’s own contributions. If soldiers save the maximum monthly limit of 400,000 KRW during the current 18-month Army service period, they can accumulate approximately 7,542,000 KRW in principal and interest with preferential interest rates, plus 2,510,000 KRW in government support, totaling about 10 million KRW in lump sum savings.

Additionally, starting January next year, restrictions on the number of times enlistment dates can be postponed due to entrepreneurship will be lifted for venture and social enterprise founders and those who have won startup competitions.

This content was produced with the assistance of AI translation services.