Lee Kwang-jae’s “Future Fund” proposal sounds, at first, like a radical response to South Korea’s birth crisis. In a new policy book released in June, the Democratic Party lawmaker proposed that the state create a large asset account for every newborn: KRW 100 million at birth, invested at compound returns, partially paid out at age 20, and later used to support retirement.

The scale is striking. Under the proposal, the birth account would grow to roughly KRW 380 million after 20 years if it achieved an annual compound return of about 7 percent. The young adult would then receive KRW 100 million as seed money for education, career entry, or social independence. The remaining balance would continue to be invested until age 65, eventually reaching about KRW 6 billion. Of that amount, KRW 4 billion would go to the individual as retirement wealth, while KRW 2 billion would be returned to the state and reinvested for the next generation.

In Korean politics, the proposal is being discussed as a welfare and demographic idea. But internationally, it belongs to a broader policy family often called “baby bonds,” “child trust funds,” or “child development accounts.” The shared premise is simple: if inequality begins long before adulthood, the state should not wait until adulthood to intervene. It should create assets early, often at birth, and allow time and investment returns to do what short-term cash subsidies cannot.

That global history matters because similar ideas have already been tested elsewhere. Some survived. Some were scaled back. Some worked administratively but failed to reach the people most in need. Some became modest education-savings tools rather than full wealth-building systems. Together, they show that Lee’s proposal is not only a question of generosity. It is a question of design.

From Birth Subsidies to Asset Policy

South Korea’s demographic crisis is usually discussed through familiar policy categories: childcare, parental leave, housing support, work culture, education costs, and cash allowances. These remain central issues. But Lee’s Future Fund moves the debate into a different frame. It asks whether the state should treat birth itself as the beginning of a public asset-building process.

That matters because many young Koreans do not view childbirth as a single financial decision. It is tied to housing, job stability, marriage timing, childcare costs, private education, and retirement anxiety. A one-time birth grant can help with immediate expenses, but it does not change the larger feeling that family formation has become a long-term financial risk.

The Future Fund tries to answer that anxiety by linking three life stages into one account: birth, adulthood, and retirement. A newborn receives the account. A young adult receives seed capital. An older adult receives retirement wealth. The remaining surplus returns to the public system.

That is the proposal’s political appeal. It does not present welfare as compensation after hardship. It presents welfare as long-term capital formation.

It is also where the proposal becomes difficult. Based on South Korea’s recent birth numbers, KRW 100 million for every newborn would require more than KRW 25 trillion in initial funding for a single annual birth cohort. That does not automatically make the idea impossible, but it makes the financing question unavoidable. A pilot program, a targeted program, a universal program, and a full sovereign-fund-style system would all produce very different fiscal burdens.

Britain’s Child Trust Fund: The Closest Warning

The closest historical precedent is the United Kingdom’s Child Trust Fund. Launched in the 2000s, it created tax-free savings accounts for children born between September 2002 and January 2011. The government made initial contributions, parents and relatives could add money, and young people could access the funds at age 18.

In principle, it was one of the world’s clearest attempts to make every child enter adulthood with at least some capital. Millions of accounts were created. Many young adults eventually received useful sums. But the program was closed to new entrants after a change of government, and the later record became complicated.

A major problem was not simply financial. It was administrative visibility. Many young people did not know their accounts existed. Some families had moved. Some accounts became detached from the very people they were meant to help. In other words, the account existed legally, but not socially.

For Korea, this is an important lesson. A child asset account cannot be treated as a one-time political announcement. It has to be maintained, communicated, and administered for nearly two decades before its first real test arrives. The state must keep beneficiaries connected to their accounts through family moves, school transitions, care arrangements, digital access gaps, and changes in household structure.

If Korea ever pursued a Future Fund, account visibility would be part of the policy itself. School-based financial education, automatic digital access, outreach to care leavers, and active tracing of dormant accounts would not be optional details. They would determine whether the system actually reaches the young adults it was designed to support.

Singapore and Canada: Helpful, but Not Transformative

Singapore offers a more practical and durable model. Its Baby Bonus Scheme and Child Development Account provide parents with cash support and dedicated savings for approved child-related expenses. Funds can be used for childcare, preschool, medical, and related costs. Unused balances later move into education-linked accounts.

This model has survived because it is closely tied to real family expenses. It does not promise to make children wealthy at retirement. It helps parents manage the cost of raising children now.

But Singapore’s model also shows the limits of matching-account systems. When governments match parental savings, families with more disposable income are better positioned to capture the full benefit. The policy may help many families, but without progressive design, it can also amplify the advantage of households already able to save.

Canada’s education savings system points in the same direction. Through Registered Education Savings Plans, grants, and the Canada Learning Bond, the government tries to encourage families to build education funds for children. The system has helped expand education savings and support post-secondary planning. But lower-income families still face participation barriers, including awareness, paperwork, financial literacy, and limited spare income.

The lesson for Korea is direct. If a child asset policy relies heavily on parental contributions, it will not automatically reduce inequality. A wealthy family can add to the account. A struggling family may not be able to. Over 18 or 20 years, that difference compounds.

Lee’s proposal avoids part of that problem by starting with a large public contribution rather than a small matching incentive. But that solution creates the opposite challenge: a much larger fiscal cost.

U.S. Baby Bonds: Targeting Wealth Inequality

The United States offers another path. In recent years, “baby bonds” have become a policy tool for addressing racial and class wealth gaps. Connecticut became the first state to implement a funded baby bonds program. Its model is targeted rather than universal: babies whose births are covered by Medicaid are automatically enrolled and receive a publicly invested deposit. The funds can later be used for wealth-building purposes such as education, homeownership, business formation, or retirement savings.

Washington, D.C. passed its own Child Wealth Building Act, creating accounts for eligible children with deposits tied to household income. California’s HOPE program takes a narrower approach, focusing on especially vulnerable children, including those who lost a parent or caregiver to COVID-19 or spent time in foster care.

These American examples show a different design logic. Rather than giving every newborn the same account, the state concentrates resources on children with the weakest family wealth base. That approach is fiscally easier and more redistributive. It also changes the politics. Universal programs are often easier to explain and defend because everyone has a stake. Targeted programs are more progressive per won spent, but they can be administratively complex and politically vulnerable.

Korea would need to decide which logic it wants. Is the Future Fund a universal citizenship asset? A birth incentive? An anti-poverty tool? A youth independence policy? A retirement reform? Lee’s proposal is ambitious because it gestures toward all of these goals at once. But implementation would require choosing which goal comes first.

The United States has also moved in a more universal direction through new federal child investment accounts. These provide a one-time public seed contribution for eligible children born within a specific window and allow families to add private contributions. The model is much smaller than Lee’s proposal, but it highlights another issue: when public seed money is paired with private contributions, higher-income families are likely to build much larger balances over time.

Israel and Kazakhstan: Universal Accounts and Sovereign Wealth

Israel provides a useful example of a universal child savings model. Its “Savings for Every Child” program deposits a monthly amount into a savings plan for each child. Parents can add to the account from child allowance payments, and the money becomes available in early adulthood. The program is automatic, nationwide, and integrated into the country’s welfare system.

Israel’s model shows that universal child accounts can become a normal part of public policy. But it also shows that parental choice still matters. Families decide whether to add money and where the account is managed. Investment choices, awareness, and financial literacy can all affect final outcomes.

Kazakhstan is perhaps the closest comparison to the sovereign-investment side of Lee’s proposal. Its National Fund for Children program uses part of the investment income from Kazakhstan’s sovereign wealth fund to create savings for children. The amounts credited each year are modest, but the architecture is important. National resource wealth is converted into child accounts, and the funds can later be used for education or housing.

This is relevant because Lee’s proposal depends heavily on a sovereign-fund logic. The Future Fund assumes that public capital can be invested over long periods and that compounding returns can finance major social commitments. Kazakhstan shows one version of this principle, but on a much smaller scale. It also shows that the source of capital matters. A country with a major resource fund can link child accounts to national resource wealth. Korea would need a different funding base.

The 7 Percent Question

The most important number in Lee’s proposal may not be KRW 100 million. It may be 7 percent.

A 7 percent annual compound return can look plausible when compared with long-term equity market performance or high-performing sovereign wealth funds. But a welfare promise cannot treat market returns as guaranteed. Over 20, 40, or 65 years, markets will fluctuate. A severe downturn near the payout age could create political pressure for the state to guarantee balances.

That would change the nature of the program. What begins as an investment account could become a contingent public liability. If returns fall short, does the state make up the difference? If returns exceed expectations, who owns the surplus? If a generation retires during a market downturn, does it receive less? These questions cannot be postponed, because they determine whether the Future Fund is an investment program, a pension supplement, or a state guarantee disguised as a fund.

Governance would be equally important. A Future Fund would need insulation from short-term political pressure, clear investment rules, low fees, transparent reporting, and a credible payout mechanism. Without that, the program could become vulnerable to political interference, unrealistic return assumptions, or public distrust.

What Korea Can Learn From Other Countries

The international record suggests five design questions Korea would need to answer before treating the Future Fund as a serious policy blueprint.

First, should the program be universal or targeted? A universal account would make birth itself a citizenship event and could generate broad public support. A targeted account would do more to reduce inequality per won spent. The former is politically elegant. The latter is fiscally sharper.

Second, should the payout be unrestricted or limited to approved uses? Britain allowed young adults to access their accounts at 18. Connecticut limits funds to wealth-building purposes. Singapore restricts account use to approved child-related expenses. If Korea wants the fund to support education, housing, business formation, and retirement, it would need rules that prevent misuse without making access so bureaucratic that beneficiaries give up.

Third, who manages the money? Public investment can reduce fees and protect scale, but it requires strong governance. Private providers can offer choice, but they can also create fee, access, and dormant-account problems.

Fourth, how does the state keep people connected to their accounts? Automatic enrollment is not enough. Account visibility, financial education, digital access, and outreach to vulnerable children are central to the policy.

Fifth, what is the main problem being solved? If the goal is to raise births, the effect may be limited unless housing, work culture, childcare, and gender inequality also change. If the goal is youth independence, an earlier payout may matter more than a large retirement projection. If the goal is retirement security, the Future Fund must be compared with pension reform. If the goal is wealth inequality, the amount should probably vary by household wealth.

A Powerful Idea, Not Yet a Complete Policy

Lee Kwang-jae’s Future Fund is best understood not as a finished answer, but as an opening question. Can South Korea build a welfare system that creates assets rather than only paying benefits? Can public investment be trusted across generations? Can a birth policy also become a youth policy, a housing policy, and a retirement policy?

Other countries have tried parts of this idea. Britain showed the promise and danger of universal child accounts. Singapore and Canada showed how child savings can support family and education costs, but also how matching systems can favor families already able to save. The United States showed how baby bonds can be targeted toward children with weaker wealth backgrounds. Israel showed that automatic universal savings can become part of ordinary welfare. Kazakhstan showed how sovereign wealth can be linked to child accounts.

None has done what Lee proposes at the same scale.

That is why the Future Fund deserves attention, but also scrutiny. It recognizes something real in Korean society: the birth crisis is not only about babies. It is about whether young adults believe the future is stable enough to enter, invest in, and pass on.

A society cannot solve that problem with slogans. It also cannot solve it with a single account. But the Future Fund pushes the debate in a useful direction. It asks whether demographic policy should remain focused on short-term subsidies, or whether Korea needs a deeper system of asset formation that follows citizens across the life cycle.

Turning birth into wealth is possible in theory. Making it fair, durable, and fiscally credible is the much harder task.