Preferred Savings Banks Double to Four

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Expansion of the Preferred Savings Program for SME Employees

Starting next month, the number of banks offering the 'Preferred Savings Program for SME Employees' will increase from two to four. This expansion is expected to improve accessibility for subscribers and provide more options for small and medium-sized enterprise (SME) workers who want to save lump sums.

The Ministry of SMEs and Startups announced on the 17th that it had signed a business agreement with NH Nonghyup Bank, KB Kookmin Bank, and the Korea SMEs and Startups Agency (KOSME) at the Bankers’ Association Building. This move aims to expand the list of banks offering the 'Preferred Savings Program'. NH Nonghyup Bank and KB Kookmin Bank will begin handling the program from the 15th of next month.

The Preferred Savings Program is a lump-sum savings product designed for SME workers. Participants save between 100,000 to 500,000 Korean won monthly. In addition, companies contribute an extra 20% of the savings amount, and banks offer preferential interest rates of up to 4.5%. Upon maturity of the 5-year term, workers receive at least 39.8 million Korean won.

Initially, only the Industrial Bank of Korea (IBK) and Hana Bank handled the Preferred Savings Program. However, the addition of NH Nonghyup Bank and KB Kookmin Bank is expected to enhance convenience for subscribers. In September, a 3-year term product was introduced alongside the existing 5-year term, increasing the diversity of available options.

During the agreement ceremony, representatives from Hanpass and Ssangin attended and conducted advance subscriptions for the Preferred Savings Program for 30 young employees. Kim Kyung-hoon, CEO of Hanpass, stated, “SMEs struggle to hire talent, and even when they do, employees often move to other companies, causing significant workforce challenges. The Preferred Savings Program will incentivize long-term retention of talent, greatly aiding in resolving labor shortages.”

Key Features of the Preferred Savings Program

  • Monthly Savings: SME workers save between 100,000 to 500,000 Korean won per month.
  • Company Contribution: Companies provide an additional 20% of the savings amount.
  • Bank Interest Rates: Banks offer preferential interest rates of up to 4.5%.
  • Maturity Value: Upon completion of the 5-year term, workers receive at least 39.8 million Korean won.

Growth and Impact of the Program

The Preferred Savings Program, launched in October of last year through collaboration between private banks and the government, has seen significant growth. Over the past year, it has attracted 36,500 subscribers from 7,100 companies, with an average of 5.1 subscribers per company.

Minister Han Seong-sook of the Ministry of SMEs and Startups emphasized the importance of the program, stating, “We will continue to develop various policy measures to help more people recognize SMEs as desirable workplaces.”

Future Prospects

With the expansion of the program to include more banks and the introduction of new terms, the Preferred Savings Program is well-positioned to support SME workers in building their financial security. As more companies and employees become aware of the benefits, the program is expected to play a crucial role in addressing labor shortages and fostering long-term employee retention.

This initiative not only provides financial incentives but also strengthens the relationship between SMEs and their employees. By offering a structured savings plan with company and bank support, the program encourages a sense of stability and loyalty among workers, which is essential for the growth and sustainability of SMEs.

As the program continues to evolve, it is likely to become an essential tool for both employees and employers, contributing to a more resilient and dynamic SME sector.

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