Youth Hope Savings Baton Touch... Yoon's 'Youth Leap Account' Gains Attention

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] As the current government’s 'Youth Hope Savings' program, aimed at helping young people build assets, has seen unexpected popularity, interest is growing in the 'Youth Leap Account' pledged by President-elect Yoon Seok-yeol.

According to the financial sector on the 12th, President-elect Yoon decided to promote the Youth Leap Account as one of the youth-related pledges during the recent presidential election. The Youth Leap Account is a product where young people aged 19 to 34 with earned income from work or business can save a certain amount up to a monthly limit of 700,000 KRW, and the government will add 100,000 to 400,000 KRW monthly, creating a total of 100 million KRW after 10 years.

For example, if the annual income is 24 million KRW or less, the maximum monthly deposit is limited to 300,000 KRW, and the government provides up to 400,000 KRW monthly. If the annual income is over 24 million KRW but 36 million KRW or less, the maximum monthly deposit is limited to 500,000 KRW, and the government supports up to 200,000 KRW monthly. For those with an annual income exceeding 48 million KRW, government subsidies are not available, but tax exemption and income deduction benefits are provided.

Youth Leap Account subscribers can choose their investment operation type based on their judgment among ▲stock type ▲bond type ▲deposit type. Additionally, in cases such as first-time home purchase, long-term unemployment, long-term leave due to illness, or disaster, early withdrawal and re-enrollment are permitted. However, overlapping enrollment or support with similar government-funded programs is not allowed.

The financial sector expects that President-elect Yoon’s Youth Leap Account will also gain great popularity, as the current government’s Youth Hope Savings attracted sensational interest. Unlike the Youth Hope Savings, which targets those with an annual income of 36 million KRW or less, the Youth Leap Account has no income restrictions and offers support amounts reaching tens of millions of KRW over 10 years.

In fact, the Youth Hope Savings, which combines high interest rates with government savings incentives (2% of the first-year deposit, 4% of the second-year deposit), saw the final number of subscribers reach about 2.9 million, more than seven times the initial estimate of 380,000.

However, the industry is concerned about the potential increased burden due to the Youth Leap Account. If the government fully funds it, the burden would not be significant, but otherwise, banks may have to share the cost. In the case of Youth Hope Savings, the unexpectedly large number of subscribers is expected to cost the banking sector an additional 600 to 800 billion KRW. Recently, there have even been considerations to allow voluntary switching from Youth Hope Savings to the Youth Leap Account.

A financial sector official said, "While Youth Hope Savings has the effect of retaining young financial consumers, considering the costs, some argue that the tail is bigger than the belly," adding, "The key to the Youth Leap Account is securing funding, and we need to watch how this will be concretely realized."

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