[Sponsored Report] IBK launches worker’s asset-building program

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[Sponsored Report] IBK launches worker’s asset-building program

To help humble workers accumulate assets, Korean banks have revived the “Workers’ Asset-Building Savings” program.

Offered by the Industrial Bank of Korea (IBK), the product gives customers tax exemptions for the interest earned during the contract period thanks to the Special Tax Treatment Control Law. Residents are eligible if they have labor or business income totaling less than 50 million won during the previous tax period or less than 35 million won in composite earnings.

Each quarter, deposits can be made in 10,000 won increments up to 3 million won, though the maximum applies to accounts across financial institutes and the bank can verify that the customer does not exceed the limit by using a centralized database.

The contract period is seven years with an extension available for up to three years if requested at least one day before the end date.

Customers may not withdraw their money early if they wish to benefit from the income tax exemption. However, the agricultural special tax is levied at an annual rate of 1.4 percent. After the redemption date, interest is taxed at the standard rate.

From the account’s opening until the third year, the interest rate declared on the date of opening is applied (4.3 percent). Then, after the third year, the interest rate is updated each year according to the bank’s declarations.

If the account is closed before the end date, then an early cancellation interest rate is applied for three years and the contract rate is applied after the third year. If it is closed within three years, the contract rate will only be applied if it is a special closing mentioned in the law or because the customer has been determined to be a disqualified person.

After the end date, the interest rate is reduced by one-half within the first year, and the regular savings account rate is applied thereafter.

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