Korea’s National Pension Scheme
By The National Pension Service
What is the Korean National Pension Scheme?
The National Pension Scheme is a social security system implemented by the government to contribute to the stability of life by determining contributions and paying pension benefits for insured people or their dependents to prepare for retirement or unexpected risks such as disability and death.
Are foreigners compulsorily covered under the NPS?
Foreigners who are aged between 18 and 60 and who are residing and working in Korea, regardless of their nationality, should be covered under the NPS. Foreigners whose countries do not cover Korean nationals, however, are excluded from the coverage of NPS(Article 126 of the National Pension Act). Despite the above provisions, if there are relevant provisions under the Social Security Agreement between Korea and any foreign countries, those provisions will be applied (Article 127 of the National Pension Act).
Could you tell me about Korean Benefits?
If foreign insured persons are entitled to Old-age, Disability, or Survivor Pension, they will receive the same pension benefits as Koreans.
Old-age Pension
The Old-age Pension is paid monthly to those whose insured period is more than or equal to 10 years, and who are aged over 60, for the rest of their lives. The pensionable age will increase by 1 year every five years starting from 2013 until it reaches 65 in 2033.
Disability Pension
The Disability Pension is paid to those with disabilities after treatment of diseases or injuries incurred during the insured period, according to the degree of disability. Annuities will be paid to those with 1st, 2nd, and 3rd degree disabilities, and lump-sum benefits will be paid to those with 4th degree disabilities.
Survivor Pension
If currently insured persons or pensioners are deceased, the Survivor Pension will be paid every month to their surviving dependents whose livelihood was supported by the deceased person.
What is the contribution rate?
For Workplace-based Insured Persons, the insured persons and their employers should each make contributions amounting to 4.5% of the standard monthly income based on their earned income (for the employer of a non-corporate workplace, based on income gained from wholesale, retail, manufacturing and other businesses).
The Individually Insured Persons should make contributions amounting to 9% of the standard monthly income based on the income that they report.
There is no discrimination in terms of the contributions rate between foreigners and Koreans. The payment should be made no later than the 10th day of the following month. If the 10th day is a holiday or Saturday, however, the deadline will be extended automatically to the following business day.
How is the standard monthly income calculated?
The standard monthly income is different from the actual earnings received by the insured person in any given month. What does this mean?
The standard monthly income is calculated by dividing the insured person’s total annual income from the previous calendar year by 365 (total days in a year), and then multiplying that number by 30 (days in a month). The resulting figure is the standard monthly income (non-taxable income is excluded from the calculation of real monthly income). The insured person’s standard monthly income is applied from July of any one year through June of the following year, regardless of any changes in the insured person’s real monthly earnings.
For those individuals who have yet to work a full calendar year in Korea, their standard monthly income, till June of the following year, will be almost equal to their earnings in the first calendar month of their employment in Korea. At June of the following year, their standard monthly income will be re-calculated by dividing their total income received in that year by the total number of calendar days in the period of their employment. As above, this will be applied from July of that year through June of the following year.
Upon completing a full calendar year of employment, the insured person’s standard monthly income will be recalculated accordingly.
In which circumstances am I eligible for a lump-sum refund?
In the case that a foreigner falls under any of the following conditions, a lump-sum refund will be paid.
- In cases where a foreigner whose home country grants Koreans a benefit corresponding to a lump-sum refund under the National Pension Scheme. Under this rule, only the nationals from the following 31 countries may receive the Korean lump-sum refund. Please refer to Article 126 of the National Pension Act and Article 113 of the Enforcement Decree of the National Pension Act.
- In cases where a foreigner whose home country has concluded a social security agreement with Korea regarding the payment of the lump-sum refund.
- Regardless of nationality, in cases where a foreigner, who has been covered under the national pension scheme with a stay visa of E-8 (Employment for Training), E-9 (Non-professional Employment), or H-2 (Visiting Employment) returns to his/her home country.
Countries whose Nationals are Granted a Lump-sum Refund (as of January, 2012)
Regardless of Nationality: E-8 (Employment for Training), E-9 (Non-professional Employment), H-2 (Visiting Employment)
Under the Social Security Agreement (13 countries): Germany, US, Canada, Hungary, France, Australia, Czech Republic, Belgium, Poland, Slovakia, Bulgaria, Romania, Austria
Minimum Insured Period:
Over 6 months: Belize
Over 1 year (10 countries): Grenada, Barbados, Zimbabwe, Cameroon, Congo, Thailand, Togo, Jordan, Saint Vincent and Grenadine, Bhutan
Over 2 years: Venezuala
None (19 countries): Ghana, Malaysia, Vanuatu, Bermuda, Sudan, Sri Lanka, Switzerland, El Salvador, India, Indonesia, Kazakhstan, Kenya, Colombia, Trinidad and Tobago, Turkey, The Philippines, Hong Kong, Tunisia, Uganda
Countries mentioned above are changeable by the law of the domicile of foreign countries and the Social Security Agreement.
I am planning to leave Korea this month. How can I apply for a lump-sum refund and what documents do I need for application?
You must first visit one of our regional offices and bring with you several documents. These are: your Alien Registration Card, your passport, an airline ticket to confirm your emigration from Korea (the date of departure must be less than one month from the date of your claim), and a bankbook (or a bank statement, or voided check) for the account to which you wish your refund to be disbursed.
Gwangju Regional Office
3rd Floor, Kukminyeongeum Gwangjuhoegwan Bldg. (국민연금 광주회관), 1582-4 Usan-dong, Gwangsan-gu, Gwangju
Phone: 062)958-2075
Fax: 062)455-3002
How to get there: Take bus no. 20, 29, 37, or 70. Get off at IlSin Apt. or Honam Hospital stops. If you get off at IlSin Apt., walk straight about 200 meters to Honam Hospital. You can find Kukminyeonkum Gwangju Building around Kukmin Bank or Honam Hospital.
Dong-Gwangju Regional Office
8th Floor, Amore-Pacific Building, 5 Geumnamno, Gwangju
Phone: 062)230-0789
Fax: 062)455-3022
How to get there: Take bus no. 19, 38, 39, 57, 70, 79, 160, 170, 180, 180-1, or 1187. Get off the bus at Lotte department store. By subway, get off at Geumnamno 5-ga station, take exit 1, then walk for about 2 minutes.
Buk-Gwangju Regional Office
1∼2nd Floor, Songgang Bldg.(송강빌딩), (33-43 Yu-dong), 291 Geumnamno, Buk-gu, Gwangju
Phone: 062)520-8124
Fax: 062) 455-3042
How to get there: This office is across from Hanguknochong(한국노총) at Yudong Intersection. Go to the 2nd floor.
For more information, visit http://english.nps.or.kr/jsppage/english/main.jsp