Youth Preferential Subscription Savings Account 'Gaining Popularity'

Tax and Interest Rate Benefits... 420,000 Subscribers and Deposits Surpass 1.5 Trillion Won

[Asia Economy Reporter Kangwook Cho] The number of subscribers and the deposit amount for the ‘Youth Preferential Subscription Savings Account,’ which offers tax and interest rate benefits to young people, have each exceeded 420,000 and 1.5 trillion KRW, respectively.

According to data submitted by the Ministry of Land, Infrastructure and Transport to Park Sang-hyuk, a member of the Democratic Party of Korea, the cumulative number of subscribers to the Youth Preferential Subscription Savings Account, introduced in July 2018, reached 427,491 as of March this year, with a cumulative amount of 1,535.361 billion KRW.

This account was designed as a youth-specialized product under the government’s housing welfare roadmap in 2018. It maintains the subscription function and income deduction benefits of the existing Housing Subscription Comprehensive Savings while providing an interest rate of up to 3.3% per year and tax exemption on interest income for 10 years. Initially targeted at those aged 19 to 29, the eligibility was expanded to those up to 34 years old starting January 2019. However, there are income restrictions, including earned income of 30 million KRW or less and comprehensive income of 20 million KRW or less.

The number of new subscribers, which was 117,164 in the first year of implementation, steadily increased to △155,935 in 2019 △158,519 in 2020, and 35,305 up to March this year. The cumulative amount surpassed 500 billion KRW in April 2019 at 501.991 billion KRW, 1 trillion KRW in May last year, and 1.5 trillion KRW in March this year.

This product is operated under a sunset clause allowing subscriptions only until December 31 of this year, considering the financial soundness of the Housing and Urban Fund, but the Ministry of Land, Infrastructure and Transport has proposed extending the system to the Ministry of Economy and Finance. Jang Kyung-tae, a Democratic Party member, recently introduced a revision bill to the Restriction of Special Taxation Act to extend the sunset clause by three years until 2024 and to relax the income requirements to 35 million KRW for earned income and 25 million KRW for comprehensive income.