Kim Hee-jin, an official at the Financial Services Commission's youth policy division, oversaw every stage of the Youth Future Savings Account, from design to launch. When the product first went on sale in June, the stock market was booming, leaving her deeply uncertain whether young people would take interest. It proved a success. A total of 1.385 million people signed up in the first round alone. For that work, Kim received the commission's internal staff award early this month.
The program begins its second round of sales on the 7th. It is a three-year flexible-deposit account open to those aged 19 to 34, who can pay in up to 500,000 won a month as they choose. Participating financial firms offer interest rates of up to 8% a year, and the government contributes either 6% or 12% of the amount deposited. Interest income is exempt from tax.
Kim, who created the account, said on the 6th that the focus was on shortening the term while supporting as many young people as possible and simplifying the structure so that support continues even if a participant's income changes after enrollment.
The government is also pushing to scrap the income requirement and expand its matching contributions. "After taking applications in the first round, we found more young people than expected were being turned away because of the household income threshold," she said. "Given how hard it is for young adults to build assets right now, the aim is for the government to support a wider range of those who want to try."
An appeals procedure has been added starting with the second round. "In the first round, we were dealing with a very large pool of applicants, so we were unable to set aside a separate appeals period," Kim said. "This time we have put a formal procedure in place so that not a single person is left out."
Enrollment is also straightforward for those at military training centers. "We received complaints that young men who had entered training centers could not use mobile phones and therefore had difficulty signing up," she said. "We consulted with the Ministry of National Defense at the time so that young people in training could enroll as well, and I felt proud that so many service members actually signed up."
The commission also gathered views through various channels while designing the product, including meetings with young adults, surveys and social media. The shorter maturity is one example. "Many said the youth years bring many changes in the life cycle, such as marriage and job moves, making it hard to keep an account for a full five years," Kim said. "There were also many early terminations, so we changed it." She added that the government is pushing for tax law revisions that would allow maturity proceeds from the Youth Future Savings Account or the Youth Leap Account to be paid in a lump sum into the productive-finance Individual Savings Account, or ISA, to be introduced next year.
