Refund from maturing youth savings plan to be transferred to Youth Leap Account

[Photo by Yonhap]

The South Korean government will allow subscribers whose Youth Hope Savings Account matures in February 2024 to transfer the refund to a Youth Leap Account, in a move to increase their returns after two plus years of depositing into their youth installment savings plans. These transfers are expected to generate up to 4.07 million won ($3,019) in additional returns compared to putting it into a regular savings product. The measure will benefit about 2.1 million account holders who are eligible for the transfer.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho unveiled the measure during a meeting with reporters held on the margins of the annual International Monetary Fund (IMF) and the World Bank (WB) meetings, as well as the G20 Finance Ministers’ meeting, in Marrakesh, Morocco, on Friday (local time). “We will continue our support for young people to use the refund from their Youth Hope Savings Account to build their assets,” Choo said. “We plan to allow one-time deposits of the maturity refund from the installment savings plan into the Youth Leap Account. This will allow those with an installment savings plan to take advantage of the tax-free and subsidized incentives that the Youth Leap Account offers.”

The Youth Leap Account is a government-backed savings product that allows monthly deposits of up to 700,000 won for five years. The refund from the Youth Hope Savings Account, due in February 2024, exceeds the monthly deposit limit of 700,000 won per person and will be around 13 million won per individual.

The government will thus make an exception to allow this amount to be paid as a lump sum. By depositing the refund from the Youth Hope Savings Account into the Youth Leap Account and making monthly deposits of 700,000 won from the 19th month onwards for 42 months, totaling five years, the calculation suggests that a subscriber will earn about 4.07 million won more than if they deposit it in a regular savings account.

The purchase limit for immediate tax refunds for tourists at duty-free shops will also be raised starting in 2024. Choo said the government plans to increase the immediate tax refund limit for duty-free shops from the current 500,000 won per purchase and 2.5 million won in total transactions to boost visitors’ convenience as they shop and stimulate domestic consumption. “We are actively considering a plan to significantly increase the limit for immediate duty-free refunds from 2024 to expand the benefits for small businesses from the improved condition for tourists,” Choo said.