Breaking the cycle of poverty through subsidized savings accounts for children

  • Date: 2016-10-13
  • Source: Department of Information Services, Executive Yuan

A new program designed to help children from low-income families break the cycle of poverty was unveiled by the Ministry of Health and Welfare (MOHW) today. The program provides matching government deposits in designated “education and development savings accounts” to help disadvantaged children develop future careers and start businesses.

After being briefed on the program at today’s Cabinet meeting, Premier Lin Chuan expressed hope that the program’s savings mechanism, a joint effort by parents and the government, will help make saving a habit for those young people while establishing a firm foundation for their future employment or entrepreneurial efforts. Under the program, which will apply to young people born after January 1, 2016 in low- and lower-middle-income households and those in long-term placements outside their original homes, parents may put up to NT$15,000 (US$476) per year into a child’s account, with the government providing a matching subsidy each year until the child reaches the age of 18. With tax-free interest, the account savings will thus serve as each child’s first real stake in life, helping to pay for his or her higher education, vocational training, or business startup. This will prevent disadvantaged children from becoming mired in a cycle of poor education, manual jobs and isolation from society, according to the MOHW.

Aimed at helping children learn to save money and accumulate assets early on, the plan encourages monthly deposits and offers incentives by providing matching government subsidies. Funds in these special accounts will not be counted as household assets so that families will not be disqualified from welfare and benefits earmarked for lower income households, will be interest tax-free, and cannot be seized, used to offset loans or as collateral, or subject to compulsory execution of payment, according to the MOHW.

The MOHW said that families who are unable to make account deposits will be matched up with charitable organizations that can “adopt” them and provide assistance. The ministry will also incorporate multiple channels to make deposits easier; supply material goods to reduce expenses for disadvantaged households; send social workers to provide counseling to families unable to make account deposits for six months; offer job placement services, government-sponsored temporary work, or part-time work for unemployed family members who are able to work; and commission participating financial institutions to provide financial education.

With an estimated budget of NT$26.15 billion (US$830.69 million) over the next 18 years, the plan will benefit 10,000 children from low- and lower-middle-income households in 2017. The number of beneficiaries will increase by 10,000 per year and reach 180,000 in 2034.