The total subscription amount of the Individual Savings Account (ISA), launched in March 2016 to support the accumulation of national wealth, has surpassed 30 trillion won in 8 years and 5 months since its introduction.
The Korea Financial Investment Association announced on the 30th that as of the end of August this year, the subscription amount of ISA reached 30.2722 trillion won, with 5.646 million subscribers.
ISA is an account-type product that allows investment by combining various financial products from multiple sectors such as stocks, funds, and deposits into one account while receiving tax benefits.
Interest, dividend income, profits and losses from domestic listed stocks are aggregated and exempt from tax up to a maximum of 2 million won for the general type (4 million won for the low-income type). Amounts exceeding this limit are subject to a separate low tax rate of 9.9%.
Since the introduction of the investment brokerage-type ISA, which can only be handled by securities companies in February 2021, the subscription amount and number of subscribers have increased sharply. Thanks to the growing interest in stock and exchange-traded fund (ETF) investments and the government's announcement of expanded ISA tax benefits, the subscription amount has increased by about 6.8 trillion won and the number of subscribers by about 714,000 this year. Compared to the end of February 2021 when the investment brokerage-type ISA was introduced (6.4 trillion won, 1.939 million subscribers), the subscription amount has increased 4.7 times and the number of subscribers 2.9 times.
By ISA type, the scale of trust-type and discretionary-type accounts has relatively shrunk or decreased, but the investment brokerage-type has increased significantly. This shows a continuing trend of shifting from 'low-yield financial products' centered on deposits to 'high-yield investment products' through the capital market.
By type, the subscription amount for the brokerage-type has increased by 15.94 trillion won (52.7% of the total subscription amount) since its launch in February 2021. During the same period, the trust-type and discretionary-type increased by 6.8263 trillion won and decreased by 24.7 billion won, respectively.
By number of subscribers by type, the brokerage-type has gained 4.691 million subscribers (83.1% of the total subscribers) since its launch in 2021. During the same period, the trust-type and discretionary-type decreased by 936,000 and 163,000 subscribers, respectively.
Based on subscription amounts by financial sector handling ISA, securities companies accounted for 16.3 trillion won (53.9%) and banks 14 trillion won (46.1%). Since securities companies surpassed banks at the end of May 2024, the gap has gradually widened.
Based on the number of subscribers by sector, securities companies had 4.734 million subscribers (83.9%) and banks 912,000 subscribers (16.1%). Compared to the end of 2016, the number of bank subscribers has decreased by more than half, while securities companies have increased about 23 times thanks to the introduction of the investment brokerage-type ISA.
By age group and gender of ISA subscribers, the number of subscribers is increasing across all age groups. Since the introduction of the investment brokerage-type, the proportion of subscribers in their 20s has sharply increased from 6.4% at the end of 2020 to 17.0% at the end of August 2024.
By gender, among those in their 20s and 30s, males (1.233 million males, 974,000 females) outnumber females, while among those aged 50 and above, female subscribers (1.168 million females, 973,000 males) are more numerous. By ISA type, the 20s and 30s age group has a higher proportion of brokerage-type (43%), discretionary-type (27%), and trust-type (20%), while those aged 50 and above have a higher proportion of trust and discretionary types (trust-type 62%, discretionary-type 52%, brokerage-type 33%).
Meanwhile, most of the investment brokerage-type ISA is managed through stocks (39%) and ETFs (33%). Bonds, which became available for operation following last year's revision of the Restriction of Special Taxation Act, account for 7%, ranking next after deposits and savings.
The Korea Financial Investment Association expects the scale of ISA subscriptions to increase further due to the government's plan to expand ISA tax benefits. According to the tax law amendment announced by the government, the tax-exempt limit will increase to a maximum of 5 million won for the general type (10 million won for the low-income type). The annual contribution limit will also be expanded from 20 million won (total 100 million won) to 40 million won (total 200 million won). Discussions to revitalize ISA are actively underway in the National Assembly as well.
Lee Hwan-tae, head of the Industry Market Division at the Korea Financial Investment Association, said, "ISA, known as the 'National Account' and 'All-purpose Account,' has firmly established itself as a national asset management account," adding, "The increase in ISA subscriptions through expanded tax benefits will support the value-up of our companies and stock market."
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