The Individual Savings Account (ISA), often referred to as a "versatile tax-saving account," has shown net growth despite controversies that arose during recent tax reform processes. It continues to attract significant investor interest, surpassing 100 thousand won accounts within roughly 10 years of its launch.
According to data provided by the Korea Financial Investment Association and obtained on the 30th by Kim Yong-man, a Democratic Party of Korea lawmaker on the National Assembly's Political Affairs Committee, the number of ISA accounts at the top 10 securities firms by subscriber count increased by a net 145,230 from August 3 to September 1.
There were 203,164 new subscriptions and 57,934 cancellations. In terms of net growth alone, this represents a 34.2% increase compared to the same period last year, which saw a net gain of 108,254 accounts. Last year, there were 141,323 new subscriptions and 33,069 cancellations.
In particular, during the five trading days from August 3 to 7, when controversy over reduced ISA benefits emerged, the net increase was 38,904 accounts, up approximately 60% from 24,856 in the same period last year. Notably, the net growth rate for this roughly one-month period from early August to early September was higher than the year-on-year net growth rate for the broader timeframe.
The net increase in accumulated funds also rose. From August 3 to September 1 this year, the net increase amounted to 702.7 billion won, which is approximately 55% more than the 452.9 billion won recorded during the same period last year.
The government had previously announced changes to the ISA system through a tax reform plan in early last month. Controversy over reduced benefits arose as the plan included abolishing the carryover of contribution limits for existing ISA accounts and capping the contract period at a maximum of five years. Concerns about market confusion led President Lee Jae-myung to order a comprehensive review just five days after the announcement, on the 7th of last month, causing the controversy to subside.
Despite such controversies, sustained investor interest helped push the number of ISA subscribers past 100 thousand won as of the end of last month, marking the first time this milestone was reached in 10 years and five months since the system's introduction in March 2016. The total subscription amount stands at 7.65 trillion won. According to the financial investment industry, this means that one in four adults aged 19 and older holds an ISA account.
An official from the financial investment industry analyzed, "While some argue that net growth is high due to demand from investors seeking to sign up before benefits were reduced during the early tax reform controversy last month, the fact that accounts increased by approximately 20 thousand won in just over eight months, from 8 million at the beginning of this year, indicates that the system continues to receive steady investor interest independent of the controversy."
In this regard, Kim Yong-man (Rep.) emphasized, "We must carefully consider the inconvenience and uncertainty users felt during the reform process, as well as the fact that the net growth in accounts and investment principal has increased compared to the same period last year. We must continuously refine the system so that the results of the capital market normalization efforts promoted by the government lead to stable asset formation for the public."
He added, "We will work together to create an ISA that citizens can trust and use long-term, tailored to the changing trends in the capital market and the actual usage conditions of the people."
Meanwhile, ISA accounts are tax-saving account products that allow investors to diversify their investments by consolidating various financial products, such as domestic listed stocks, funds, ETFs (Exchange-Traded Funds), and deposits/savings, into a single account. The government introduced them to support comprehensive asset management and wealth formation for citizens, earning them the nickname "versatile tax-saving accounts."
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