Korea to launch youth savings support program in June

[Photo by MK DB]

Starting this June, young Koreans aged between 19 and 34 will be given an opportunity to save up to 50 million won ($38,000) through a government-supported program by depositing up to 700,000 won per month for five years.

The new program, dubbed Youth Leap Account, aims to help young Koreans achieve economic stability and security. The program was announced on Wednesday by the Financial Services Commission as part of the Yoon Suk-yeol administration’s task.

The Youth Leap Account will begin accepting applications from eligible individuals in June, with an estimated 3 million people expected to join. To be eligible, individuals must meet both personal and household income requirements.

Total annual income must not exceed 60 million won to qualify for government contributions and tax benefits. Those with total annual income above 60 million won but not exceeding 75 million won can still join the program but will only receive tax benefits without government contributions.

Household income must be within 180 percent of the median income. For example, the income requirement for a household of two people is 6.22 million won, 7.98 million won for a household of three and 9.72 million won for a household of four.

The maximum monthly deposit amount for all participants is 700,000 won, but those with lower personal income will receive more government support. Participants with an annual income of 24 million won or less can receive up to 400,000 won in government contributions per month, with a matching rate of 6 percent.

For example, if a participant saves 200,000 won per month, the government will contribute an additional 12,000 won per month. However, those who save 500,000 won per month will receive the maximum contribution of 24,000 won per month.

For participants with an annual income between 24 million won and 36 million won, the monthly savings limit is 500,000 won, with a matching rate of 4.6 percent and a monthly government contribution limit of 23,000 won. For those with an annual income between 36 million won and 48 million won, the monthly savings limit is 600,000 won, with a matching rate of 3.7 percent and a monthly contribution limit of 22,000 won. For those with an annual income between 48 million won and 60 million won, the monthly savings limit is 700,000 won, with a matching rate of 3.0 percent and a monthly government contribution limit of 21,000 won.

Due to recent fluctuations in interest rates, interest for this savings product has not yet been determined. However, authorities anticipate competition among banks in handling the product in the future.