Japan Plans NISA for Children From Age Zero

Under the draft plan, the NISA accounts that until now were limited to those 18 and older would be opened to children from birth, giving access only to the accumulation-type investment tier. The annual investment ceiling would be reduced from the standard NISA’s 1.2 million yen to 600,000 yen, and the total lifetime contribution limit is expected to be capped at 6 million yen. Funds could be withdrawn from age 12, and if the reform proceeds, the expanded scheme could begin as early as 2027. Asked for her assessment of the change, Shinoda said the earlier junior NISA program had failed to gain traction but that the government appears to have incorporated lessons from that experience when redesigning the system, adding that a framework usable across all generations marks an important step forward.

On the proposed ceilings — 600,000 yen a year and 6 million yen in total — Shinoda noted that the old scheme offered 800,000 yen annually for up to five years, or 4 million yen in total, meaning the new version represents a broader allowance than before. But she cautioned that debate often fixates on the 6 million yen figure alone when the minimum thresholds deserve more attention, explaining that, just as with the adult NISA, investments can begin from as little as 100 yen. The low barrier to entry, she added, has improved significantly over the past decade, and it is important not to focus solely on the upper limits.

The earlier junior NISA attracted just 1.24 million accounts before being abolished, hindered in part by strict withdrawal rules that prohibited access until age 18. Shinoda said that restriction limited adoption, while the timing also worked against the program since it launched in 2016, before the adult NISA had become widely known. She said these two factors contributed to its lack of popularity.

To illustrate how the new child NISA could work in practice, the program used a financial accumulation simulator: if a household invests 10,000 yen each month at an assumed annual return of 5%, the balance available at age 12 would rise to 510,000 yen, and by age 18 — when the account converts into the standard NISA — the accumulated returns would total roughly 1.29 million yen. Shinoda said the result shows how steady saving from an early stage, even in small amounts, can build assets over time when combined with investment gains.

She added that limiting the framework to accumulation-type investments is a key feature because it encourages dollar-cost averaging and helps reduce the risk of large losses, a point the government has incorporated following issues with the previous junior NISA. Asked whether it is always better to begin accumulating as early as possible, Shinoda said that even modest monthly contributions grow meaningfully over time, making an early start advantageous.

Some observers worry that the expanded child NISA could widen wealth disparities since contributions are often funded by parents or grandparents, but Shinoda argued this issue is not unique to child accounts and is already visible among adult NISA participants, whose usage rates vary by region. She said asset formation ultimately comes down to whether households allocate money for future use rather than immediate consumption, and that even small amounts — 100 yen, 1,000 yen, or 10,000 yen — can make a difference over time.

Another concern with the old junior NISA was that withdrawals were prohibited until age 18, and some argue that a revised structure could borrow from overseas systems that restrict funds to education-related purposes. Shinoda said such a design is indeed conceivable in the future, noting that the rising cost of raising children makes education-specific accounts a potential area of policy development.

Source: テレ東BIZ