FSC allocates 20% of W9.24tr budget to youth wealth-building programs

The government plans to direct about 2.09 trillion won — roughly 22.6 percent — of the Financial Services Commission's total budget of 9.24 trillion won ($6.73 billion) next year toward youth wealth-building support. Of that, about 1.8 trillion won will go to the Youth Future Savings Account and the Youth Opportunity Fund alone, with the aim of widening eligibility, boosting government contributions, and providing interest-free loans to unemployed young people until they secure work or launch a business.

The FSC's fiscal year 2027 budget proposal, released Tuesday, allocates 1.7 trillion won to the Youth Future Savings Account and 102.7 billion won to the newly introduced Youth Opportunity Fund, bringing the combined total for the two programs to 1.8 trillion won.

The FSC's overall budget for next year stands at 9.24 trillion won, up 4.59 trillion won, or 98.7 percent, from this year. A total of 2.09 trillion won within that figure has been set aside for youth wealth-building support, covering programs including the Our Children's Independence Fund and the Youth Future Savings Account. Across the entire government budget, fiscal investment in youth wealth-building will also expand, rising from 2.9 trillion won this year to 4.2 trillion won next year.

The largest share goes to the Youth Future Savings Account, a product open to people aged 19 to 34 in which participants deposit up to 500,000 won per month and receive a government contribution at a set rate, along with a tax exemption on interest income. Since its launch in June, about 1.385 million people have enrolled.

Starting next year, income requirements for individual and household eligibility under the standard tier will be abolished. Currently, participants must meet certain income thresholds to receive government contributions under the standard tier; removing those conditions will open the program to all eligible young people. The government contribution rate for the standard tier will remain at 6 percent of deposits.

Benefits under the preferential tier will also increase. The government contribution rate will rise from 12 percent to 15 percent of deposits. Young people employed at small and medium-sized enterprises in regional areas will receive a separate preferential track, with government support of up to 25 percent of deposits. For those depositing the maximum 500,000 won per month, the monthly government contribution will reach up to 75,000 won under the standard preferential tier and up to 125,000 won for those working at regional SMEs.

Applying the government's assumed annual return of 7 percent, a young person employed at a regional SME who deposits the maximum amount every month for three years would receive about 24.79 million won at maturity. The estimated payout is 21.1 million won for the standard tier and 22.85 million won for the preferential tier. At an assumed annual return of 8 percent, the regional SME preferential tier payout rises to about 25.07 million won.

A new program called the Youth Opportunity Fund will be introduced for young people preparing to enter the workforce. Drawing on 102.7 billion won in FSC funding, the government plans to supply a total of 500 billion won in loans. Unemployed young people will be able to borrow up to 20 million won, with no interest charged until they find employment or start a business. Repayment will then proceed at an annual interest rate of 2 to 4 percent.

The program is designed to reduce the debt burden young people face before entering the workforce and to allow repayment to begin only after employment. The government has positioned the Youth Future Savings Account and the Youth Opportunity Fund as wealth-building support tools for the social-entry and job-search stages of young people's lives, respectively.

Youth wealth-building support begins at birth. The FSC has newly allocated 146.5 billion won to the Our Children's Independence Fund, a program in which parents and the government jointly contribute to a fund held in a child's name.

For households with income at or below 50 percent of the median, the government will provide a fixed annual contribution of 1.2 million won regardless of whether parents make deposits. For households between 50 and 100 percent of the median, the government will contribute up to 1 million won per year when parents deposit 500,000 won annually. For households between 100 and 150 percent of the median, the government will match up to 1 million won when parents deposit 1 million won per year.

Structured as a long-term savings and investment vehicle from birth through age 18, the fund is projected to accumulate assets of between about 60 million won and 100 million won at maturity, assuming an annual return of 5 to 10 percent. As an example, if parents and the government together contribute 2 million won per year over 19 years at an annual return of 6 percent, the fund would grow to about 70 million won.

Support then continues through subsequent life stages: the Soldiers' Tomorrow Preparation Savings Account for those on military service, the Youth Opportunity Fund during the job-search phase, and the Youth Future Savings Account after entering the workforce. Next year's budget allocates 1.81 trillion won to the Soldiers' Tomorrow Preparation Savings Account to fund matching contributions for approximately 180,000 service members due to be discharged.

To underpin this lifecycle approach to wealth-building support, the government's overall youth wealth-building budget will expand from 2.9 trillion won this year to 4.2 trillion won next year. The FSC's fiscal year 2027 budget proposal is subject to National Assembly review and is scheduled to be finalized in December.

Meanwhile, through its Aug. 13 real estate financial measures, the government introduced the Youth Future Home Loan, a new mortgage product available to people aged 39 or under purchasing a non-apartment property valued at 400 million won or less for the first time in their lives.