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Young Koreans eye Yoon‘s W100m savings account scheme

A bank`s mobile app featuring the Youth Hope Savings Product (Yonhap)
A bank`s mobile app featuring the Youth Hope Savings Product (Yonhap)
Young South Koreans are anticipating the incoming Yoon Suk-yeol administration’s version of its state-backed savings account, with a goal of helping investors accrue 100 million won ($80,500).

The state-backed savings account would allow South Korean residents aged between 19 and 34 to subscribe and submit a monthly payment of a maximum 700,000 won for a 10-year term, with an annual yield of 3.5 percent, a booklet of Yoon’s presidential pledges published by the People Power Party showed Tuesday. On top of the subscriber’s payment, the government plans to add up to 400,000 with its own budget, making the total maximum monthly payment 1.1 million won.

Subscribers can change the savings account into a deposit account, or mix up the portfolio with securities and bonds, though the related details have yet to be revealed.

The savings account mirrors the Moon Jae-in administration’s “Youth Hope Savings Product” which saw a total of 2.9 million subscribers in the age range of 19 to 34. The product sold between late February and early March requires applicants to submit a monthly payment of 500,000 won for a 2-year term with an annual yield of some 10 percent.

Unlike the Moon administration’s savings account which only accepted subscribers with an annual income below 36 million won, Yoon plans to lift the cap and accept all those within the age range, regardless of their earnings.

Instead, different benefits will be offered to different income brackets. Those with an annual income of below 36 million won will receive more government funding compared with those earning more than 36 million won.

The account will only accept subscribers without a similar state-backed savings account, which means that the Youth Hope Savings Product subscribers will have to close their accounts in order to open the new one.

Despite heightening anticipation over the news of the account, onlookers have been expressing concerns over the size of the state budget required to fund the program. The Youth Hope Savings Product with 2.9 million subscribers will require 1.4 trillion won for the next two years. Under the same calculation, Yoon’s savings account will need at least 34 trillion won over the planned 10 years, as more subscribers are expected.

According to Statistics Korea, the number of employed South Koreans between the age of 20 to 34 came to 6.3 million as of July last year.

By Jung Min-kyung (mkjung@heraldcorp.com)
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