Helping Asset Building Across the Entire Life Cycle Through Business Linkages
Singapore Operates Systems Connecting Childhood → Youth → Post-Retirement
A recommendation has been made to activate the linkage between asset formation projects such as the Youth Leap Account and the Comprehensive Housing Subscription Savings to ensure continuous asset formation from childhood to old age.
Park Joon-tae, a research fellow at the Korea Institute of Finance, emphasized the need for asset redistribution according to the life cycle in his report titled "Overseas Cases and Implications of Life Cycle Asset Formation Support Projects," released on the 11th. Park explained, "Considering the period of economic activity, income shifts from a 'deficit' during childhood and youth in their 20s to a 'surplus' in middle age, and then back to a 'deficit' in old age." He added, "Especially in Korea, where the aging speed is rapid and the elderly poverty rate is high, it is important to redistribute income stably throughout the entire life cycle." The idea is to balance by accumulating surplus income during surplus periods and redistributing it during deficit periods.
However, he pointed out that Korea is still lacking in response to this. Park criticized, "Various asset formation projects are operated under the leadership of the government or local governments, but they do not lead to continuous asset formation." For example, the linkage between projects such as the Didimdol Seed Account for children receiving basic living benefits, the Youth Hope Savings and Youth Leap Account that help young people with mid- to long-term asset formation, the Individual Retirement Pension (IRP), and the Comprehensive Housing Subscription Savings is not established, resulting in asset formation being limited to a short period.
He suggested, "If the currently operating youth asset formation projects and the Comprehensive Housing Subscription Savings can be linked, the effectiveness of asset formation projects can be enhanced," proposing a plan to grant additional points when a certain amount of the maturity proceeds from youth asset formation projects is deposited into housing subscription savings. Citing Singapore’s Child Development Account as an example, he said, "If a system is established where assets accumulated through asset formation projects can be used for childcare expenses of minor children, it will not only promote participation in asset formation projects but also reduce the economic burden of childbirth and childcare."
In Singapore, the Child Development Account is operated to support savings for childcare and education of children aged 0 to 6, where the government matches the saved amount with subsidies. Unused balances in this account are transferred to the University Education Account (an asset accumulation project aimed at preparing for children’s future university tuition). Similarly, unused balances in the University Education Account are transferred to the Central Provident Fund account to be used for pensions, medical care, and housing purchases after retirement, thereby enhancing the effect of asset formation.
Park emphasized, "To establish an integrated asset formation support system across ministries, social consensus must first be reached on setting eligibility criteria and resolving equity issues with non-participants." He also stated, "It is necessary to review whether there are overlapping or neglected areas in asset formation support projects currently conducted by central government ministries and local governments to prevent the proliferation of similar projects."
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