Government to Provide Up to 1.2 Million Won Annually for Children's Fund...70 Million Won Seed Money Possible with 19-Year Investment

"Our Children's Independence Fund" to Launch in the Second Half of Next Year
Support for Children Born After September This Year
Combined Annual Limit of 2 Million Won for Parents and Government... Investment Earnings Fully Tax-Exempt

The government will launch the "Our Child Independence Fund" in the second half of next year. This fund enables parents to accumulate and invest money together with their child from birth until adulthood, helping to prepare seed capital for young adulthood. Depending on income level, the government will provide up to 1.2 million won per year in support. If parents invest in addition to government support, making a total annual investment of 2 million won every year for up to 19 years, a child could amass about 70 million won in seed capital, assuming an annual return rate of 6 percent.

On October 1, the Financial Services Commission, presided over by Deputy Prime Minister and Minister of Economy and Finance Lee Hyungil, held the Emergency Economic Headquarters Meeting and Economic Ministers Meeting, where it announced the "Our Child Independence Fund Support Plan" with these details.

The government has allocated a total of 146.5 billion won to the Youth Account within the Future Preparedness Fund in next year's budget. Eligible participants are children born after September this year. From birth to age 18, the government will contribute a certain amount to a fund account in the child’s name, according to household income level.

For households with income at or below 50 percent of the median, the government will provide a flat annual support of 1.2 million won. If parents add 800,000 won, the total annual contribution reaches the 2 million won yearly cap.

For households with income between 50 to 150 percent of the median, the government will provide matching support up to 1 million won, according to parental contributions. Households at 50 to 100 percent of the median can contribute 500,000 won, which the government matches 2-to-1, up to 1 million won, allowing parents to add another 500,000 won afterward. For households at 100 to 150 percent of the median, the government matches the parents’ 1 million won contribution at a 1-to-1 ratio. For reference, the median income for a four-person household in 2026 is set at 6.49 million won per month.

The contribution period lasts up to 19 years, and the total annual contribution cap, including both parental payments and government support, is 2 million won.

Tax benefits will also be provided. All investment income, such as interest and dividends earned through the dedicated account, will be entirely tax-free. In principle, if the fund is closed before age 19, the tax-exempt portion will be clawed back. However, exceptions will be made for unavoidable circumstances such as death, overseas migration, natural disasters, or illness. The government is also considering extending the tax-free period for certain durations, such as until age 34, if the account remains open after maturity.

The government is reviewing plans to allow children who are not eligible for financial support to participate in the fund as well. Children from households with income above 150 percent of the median, and those born before August this year, could be permitted to join and contribute voluntarily within the 2 million won annual cap, and would also enjoy the tax exemption on investment returns.

Specific investment targets and operational methods will be finalized through further discussion. The government plans to determine the specific assets after considering international precedents and portfolio diversification effects, and will examine competency requirements for qualified fund managers based on responsibility and expertise. The framework will refer to existing policy funds, which set a minimum investment ratio of 40 to 60 percent in core assets, and retirement pensions, which allow up to 70 percent investment in equity funds.

The government stated, "We will establish a detailed plan for fund management in parallel with discussions in the National Assembly on the budget bill and the Special Tax Treatment Control Act. We aim to launch the fund in the second half of next year following the establishment of the necessary IT systems."

This content was produced with the assistance of AI translation services.