Lee’s “Youth Savings” Launched with 750 Billion Won Investment... 2.5 Trillion Won Allocated for Expanded Child Benefits [Lee Government’s First Budget]

Support Expanded Compared to the 5-Year Youth Leap Account
Maturity Shortened from 5 Years to 3 Years
Child Benefits in Non-Metropolitan Areas Up to 130,000 Won
"Welfare Budget Grows by 8.2%, Achieving a High Rate of Increase"

The government will allocate 744.6 billion won in next year’s budget to launch the “Youth Future Savings,” a new asset-building product for young people, which is a signature initiative of Lee Jaemyung. Starting next year, new enrollments for the Youth Leap Account will be discontinued, and the Youth Future Savings will be offered as its successor product. The government has also significantly increased the social welfare budget, including measures to address low birth rates and elderly care. The budget for low birth rate countermeasures, such as expanding the age range for child benefits, has been increased by 3 trillion won compared to the previous year, and the integrated care project for the elderly has been expanded by nearly 2 trillion won.

On August 29, the Ministry of Economy and Finance announced the “2026 Budget Proposal” containing these measures. The Youth Future Savings targets young people aged 19 to 34 with annual incomes of 60 million won or less. If a participant deposits up to 500,000 won per month, the government will add a certain percentage as a matching contribution. For standard participants, the government will contribute 6% of the deposit, while for preferential participants (those who join within six months of employment at a small or medium-sized enterprise), the contribution will be 12%. For example, if a standard participant deposits 500,000 won per month, the government will add 30,000 won each month, resulting in a monthly accumulation of 530,000 won. If maintained for three years, the standard type can build assets of about 20.8 million won, and the preferential type about 22 million won.

The key features of this reform are the broader support range and the reduction of the maturity period from five years to three, compared to the Youth Leap Account established under the Yoon Suk-yeol administration. Due to the high early withdrawal rate among Youth Leap Account holders and dissatisfaction with the five-year maturity, the aim is to enable participants to accumulate a substantial sum in a shorter period. The Youth Leap Account only provided a 6% government contribution for monthly deposits up to 400,000 won for young people with annual incomes of 24 million won or less. In contrast, the Youth Future Savings expands eligibility, allowing all qualifying young people to receive the 6% contribution. Notably, young small business owners with annual sales of 300 million won or less are also eligible to participate.

The Ministry of Economy and Finance explained that market interest rates (about 6%) will be applied to the participant’s own deposits, while a 4.5% rate will be applied to the government’s contributions. If Youth Leap Account holders switch to the Youth Future Savings, their previous government contributions will be recognized. As a result, the budget for the Youth Leap Account has been reduced to the 100 billion won range due to the halt in new enrollments.

Significant Increase in Welfare Budget... Expansion of Child Benefits and Elderly Integrated Care

The Ministry of Economy and Finance emphasized the substantial increase in the welfare budget. Yoo Byeongseo, Director of Budget at the ministry, stated, “While the budgets for other sectors are in the 30 to 40 trillion won range, the welfare sector is around 250 to 269 trillion won, and yet it saw an 8.2% increase compared to the previous year,” adding, “This is a very high rate compared to its share.”

A total of 35.8 trillion won will be invested in measures to reverse the low birth rate, an increase of 3 trillion won from the previous year’s 32.8 trillion won. The government will raise the eligible age for child benefits from under 7 to under 8 and will allocate 2.4822 trillion won, an increase of nearly 500 billion won from the previous year’s 1.9588 trillion won, to support differential payments by region. In the Seoul metropolitan area, 100,000 won per month will be provided, while 105,000 won will be given in non-metropolitan areas, and 110,000 to 120,000 won in regions with declining populations. In particular, if the benefit is paid as a local gift certificate in a depopulated area, the amount can reach up to 130,000 won.

The budget for strengthening the social safety net will also be increased by nearly 11 trillion won from the previous year (21 trillion won) to 32.1 trillion won. By raising the median income standard to a record 6.51%, the livelihood benefit for a four-person household will rise from 1,951,000 won per month to 2,078,000 won. With relaxed asset and income criteria, about 40,000 new beneficiaries are expected to be included.

The medical assistance budget for next year will be 9.84 trillion won, an increase of 1.1518 trillion won from the previous year’s 8.6882 trillion won. The requirement for a financial supporter will be abolished when selecting medical assistance recipients, allowing about 5,000 new people to qualify. The scope of support will also be expanded to include nursing care costs at long-term care hospitals, increased psychiatric treatment fees, and special diet meal subsidies. An additional 82.4 billion won will be allocated to expand the eligibility for National Pension contribution support. Previously, only those who resumed payments after a period of exemption were eligible, but going forward, the coverage will extend to 736,000 regional subscribers with monthly incomes below 800,000 won.

A total of 27.5 trillion won will be invested in projects to address population aging, such as the community-based integrated care program that helps seniors live healthy lives in their own homes. This is an increase of 1.9 trillion won from the previous year’s 25.6 trillion won. The aim is to respond to an aging society by providing integrated support for medical and nursing care and expanding tailored care infrastructure by region. In addition, a total of 2.3851 trillion won will be allocated to increase elderly job opportunities by 50,000, bringing the total to 1,152,000 positions.

For small business support, 2.3 trillion won has been allocated. The government will allocate 600 billion won to provide a 250,000 won management stability voucher, which can be used for utility bills and insurance premiums, to small business owners with annual sales of less than 104 million won. It will also support the issuance of 24 trillion won worth of local gift certificates and invest 1.15 trillion won to increase the government subsidy rate according to regional conditions. To create safer workplaces, 1.5 trillion won will be invested to strengthen investments in industrial accident prevention facilities and safety personnel. The main focus is to significantly expand the provision of essential safety equipment and technical support to small businesses and construction sites in order to prevent industrial accidents.