[Exclusive] Ministry of SMEs and Startups Considers Partial Revision of SME Employee Savings Program: "Expanding Commercial Bank Access and Incentive Payments"

Number of Banks Supporting Preferential Savings Plan Transfers to Increase from 4 to 19

Eligibility for 4 Million Won Long-Term Employment Incentive to Be Expanded

Consideration to Include Maturing Participants of the 'Youth Future Savings Account' Launching in June

The government is revising the performance-based compensation savings program to encourage long-term service among employees of small and medium-sized enterprises (SMEs). Efforts are underway to improve payment convenience for companies contributing to the SME Employee Preferential Savings Plan (Preferential Savings Plan). At the same time, discussions are taking place to expand the scope of the Long-Term Employment Incentive Payment to include the Youth Future Savings Account, which is scheduled to launch next month, in a bid to revitalize the program.

On May 15, the Ministry of SMEs and Startups confirmed that it is currently discussing a partial revision of the performance-based compensation savings program together with the Korea SMEs and Startups Agency (KOSME).

The performance-based compensation savings program is designed to support long-term employment of high-performing SME employees and help them build substantial savings. Both the company and the employee contribute to the fund, and after a certain period of employment, the accumulated amount is paid to the employee as a performance-based bonus.

The program consists of five products in total. Currently, only the 'Tomorrow Filling Savings Plan' and the 'Preferential Savings Plan' are open for new enrollments. The other products—'Youth Employee Tomorrow Filling Savings Plan,' 'Youth Employee Tomorrow Filling Savings Plan Plus,' and 'Youth Tomorrow Filling Savings Plan'—have expired (with the end of the program period), so new enrollments are no longer accepted and only existing participants are managed.

Among these, starting next month, the number of banks where companies participating in the Preferential Savings Plan can set up automatic transfers for their contributions will be greatly expanded to 19, significantly enhancing payment convenience.

Under the Preferential Savings Plan, if an employee deposits up to 500,000 won per month into a dedicated account, the company provides an additional 20% support based on the employee’s contribution. Currently, enrollment and payment of contributions are only possible at four partner banks: IBK Industrial Bank of Korea, Hana Bank, NH Nonghyup Bank, and KB Kookmin Bank. Companies must make payments through automatic transfers from their designated accounts on specified dates each month (the 5th, 15th, or 25th). Due to this structure, companies whose main banking relationship is not with a partner bank have faced the inconvenience of opening separate accounts and transferring funds.

Therefore, expanding the options for payment accounts is expected to ease the burden on participating companies. An official at KOSME stated, "We are currently working with 19 commercial banks to build the necessary system."

There are also plans under consideration to expand the eligibility for the Long-Term Employment Incentive Payment. This incentive is a system where, if a participant in the Youth Tomorrow Filling Savings Plan (2 or 3 years) enrolls in the Tomorrow Filling Savings Plan (3 to 10 years) within six months after maturity, and the combined subscription period of both plans totals seven years or more with all maturity requirements satisfied, KOSME provides an additional payment of 4 million won.

The issue is that, since the Youth Tomorrow Filling Savings Plan expired in 2024, eligibility for the incentive payment has become limited. Unless an employee is a maturing participant of the plan, it has become difficult to receive the incentive payment even after many years of service at an SME. Although it was possible to encourage long-term service through other non-expired products, under current criteria, the subscription periods for those products are not included in the calculation, leading to concerns about the effectiveness of the system.

Accordingly, the Ministry of SMEs and Startups and KOSME are reportedly considering expanding eligibility to include those who reach maturity in the performance-based compensation savings program, as well as those who complete the SME preferential version of the Youth Future Savings Account—set to launch in June—if they enroll or re-enroll in the performance-based compensation savings program. For example, if a Youth Future Savings Account participant, after completing a three-year term, re-enrolls in the Tomorrow Filling Savings Plan or the Preferential Savings Plan and maintains employment for a total of seven years, this would be recognized as long-term service and the incentive would be paid.

A KOSME official stated, "Since the expiration of the Youth Tomorrow Filling Savings Plan, there have been ongoing discussions about expanding linked support," adding, "With the upcoming launch of the Youth Future Savings Account, there is growing consensus about the necessity of this measure."

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