TOKYO - Japan will launch a new tax-free investment program for children in January 2027, allowing parents to invest up to 600,000 yen a year on behalf of children aged 17 or younger while permitting withdrawals from age 12 for expenses such as education and living costs.
Advance applications for accounts have begun this month, while financial institutions are holding events to teach families about money and investing as interest in the program grows.
The program, known as "Child NISA," extends Japan's NISA tax-free investment system to people from birth through age 17. The current NISA system is available to people aged 18 and older.
Ordinary investments in stocks and investment trusts are generally subject to taxes of around 20% on investment gains. Investments made through NISA accounts are exempt from those taxes.
Japan had 28.2 million NISA accounts open at the end of 2025, reflecting the rapid expansion of the system as the government seeks to encourage households to shift more of their financial assets from savings into investments.
Under Child NISA, contributions will be capped at 50,000 yen a month, or 600,000 yen a year. The maximum amount that can be invested under the program will be 6 million yen, meaning a family contributing the full annual allowance would reach the limit after 10 years.
Withdrawals, however, will be subject to age and usage restrictions.
A child whose family begins making maximum contributions from birth could reach the 6 million yen investment ceiling by age 10, but money cannot be withdrawn until the child turns 12.
Parents will also be unable to withdraw the funds solely on their own authority. The child's consent, including the submission of required documentation, will be necessary.
Money withdrawn from the account must also be used for the benefit of the child, including education expenses and living costs.
A survey by Matsui Securities found that 39.3% of parents with children aged 17 or younger said they wanted to use Child NISA, suggesting strong interest among families.
The government hopes the program will accelerate its longstanding policy of encouraging a shift "from savings to investment" while helping the next generation begin building financial assets at an early age.
Japan previously operated Junior NISA, a tax-free investment program for minors that ended in 2023. The system was criticized as inflexible because, among other restrictions, funds generally could not be withdrawn until the child reached age 18.
Child NISA is designed to address that problem by allowing withdrawals from age 12, when families can begin facing heavier education-related expenses.
Concerns over future education costs appear to be one of the strongest factors driving interest in the new system. A Matsui Securities survey found that more than 70% of parents said they were worried about the cost of their children's future education.
Parents attending a financial education event on October 3 pointed to inflation, university tuition, housing and everyday living expenses as reasons they were considering long-term investing for their children.
One parent said rising prices had created uncertainty over how much university tuition, accommodation and living costs might eventually become, adding that the family wanted to save as much as possible to make life easier for their daughter in the future.
Another parent of a fourth-grade elementary school student said the family hoped to gradually build up money for education and adulthood so that one day they could tell the child how much had been accumulated.
A parent of a fifth-grade student said relying solely on bank savings felt increasingly uncertain and that investing offered an opportunity for both parent and child to think together about how money can be put to work.
The introduction of Child NISA is also being promoted as an opportunity to improve children's financial literacy.
Mayu Yamaguchi, a specially appointed professor at Shinshu University, said teaching children about money could ultimately be more valuable than simply leaving them financial assets.
Yamaguchi said parents who have not used their full personal NISA allowance could already invest through their own accounts and later use the money for their children's education. The greater benefit of Child NISA, she said, may be encouraging children to think about money and investing from an early age.
The broader approach to household finances is to keep money needed in the near term in deposits and savings while using diversified, long-term investments for goals further into the future.
For many Japanese families, however, openly discussing money has traditionally been regarded as somewhat improper, leaving some adults to learn about asset building only later in life. Supporters of Child NISA say involving children earlier could help close that financial knowledge gap, regardless of whether they ultimately choose to invest themselves.
Financial institutions are also moving aggressively to attract families ahead of the January 2027 launch, using account-opening incentives and their respective investment services to compete for a new generation of customers.
The attraction goes beyond children's accounts alone. By establishing relationships with families while children are young, banks and securities companies could gain opportunities to retain those customers into adulthood while also deepening their relationships with the parents who manage the investments.
Source: TBS
