A Preliminary Policy Evaluation on Child Development Accounts in Taiwan

Background:

To address child poverty issue, the government announced the Children Future Education and the Development Accounts (CFEDA) on 1 December 2017 as a policy to build child development accounts for the poor children in Taiwan.

Taiwanese children born after 1 January 2016 from poor families or fostered children who are under government custody are eligible for CFEDA benefits. They could receive publicly subsidized matched savings in their CFEDA every year until they reach the age of 18. Participating children could receive an initial deposit of as much as NT$20%three monthly saving levels10,000 (approximately US$335) into their CFEDA. The government would match these deposit levels at a 1:1 ratio. When CFEDAs are mature, the participants are encouraged to use the accumulated assets to pay for higher education, occupational training or business start-up fund. To motivate children from low-income families to participate, participants who have not yet enrolled can be referred to a home-visiting program to mitigate possible economic crises and remove barriers to making deposits.

The policy will involve an allocated public spending up to 26.1 billion within 18-year period. Continual evaluation is necessary. This study intends to present a preliminary evaluation on the CFEDA.

Methods:

Using the administration data of the CFEDA, this study will present a profile of its implementation terms of enrollment rate, accountholders, and saving pattern. There were 17023 children opining accounts until December of 2019. Moreover, a semi-structured survey was given to7000 eligible participants who did not open an account on December of 2018 to inquire about what kind of barriers of opening accounts.

Results:

After two years of the implementation, there are 53.6% of eligible children opening CFEDA accounts. It is an obvious increase than the rate of 36% in the first year. In terms of family poverty level, over 60% of accountholders are near poor, and other thirty percent are from poorer families.

On hree monthly saving levels, 20% choose NT$500 as their first year deposit, 17% choose the level of NT$1,000, and 63% NT$1,250. Like all asset-building programs, accountholders tend to save toward the cap deposit level. Parents make deposits regularly by every month are equally distributed with parents making irregular deposits.

On barrier survey, parents with eligible children expressed “no extra money to participate in” account for 31% of the interviewees. “Need further family discussion” was listed as the second reason. About 10% indicated distrust with the participation worrying about money inflation, saving fraud, inflexible use of the account design. Social workers paid visits to 2600 families with no account opening. Thirty-percent of them decided to open accounts by making the first deposit.

Implications:

Though initial enrolments are promising, additional promoting strategies are necessary to increase the enrolment rate and ensure the long-term success of CFEDA. There are some proposals under discussion, such as effective information disseminating design, an automatic enrolment design (with the option to opt out), account savings exempted from means-tested calculation, etc. In the future, these enrolment alternatives should be amended into the policy to increase enrollment rate.