National Pension Q&A
Q1: I am a French worker at an auto company and have been at my job for over a year now. I pay the contribution each month (4.5% of my salary). Until recently, my salary was 3 million KRW per month, so I paid 135,000 won a month in pension contributions. For the past few months my salary has been at 3.7 million won per month, but I am still paying only the original 135,000 won. Because my salary has increased, should I not be paying 166,500? My company argues that the NPS determines the deduction rates. Is this right?
As you know, for employer-based insured persons, the contribution is 9% of the standard monthly income. Of this 4.5 % is paid by the insured person and the other 4.5% is paid by their employer.
Please note that 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). That total is then multiplied by 30 (days in a month). The resulting figure is the standard monthly income (non-taxable income is excluded from the calculation of standard 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.
When a foreigner starts work for a company in Korea, there obviously is no previous year’s income to report so the income as written in the contract is used as the basis for NPS contributions. However, in June of the following year, the person’s 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. Please feel free to contact the NPS (www.nps.or.kr) if you have any questions about your pension status.
Q3: As a New Zealand citizen, am I able to get a lump-sum payment of my pension contributions when I leave Korea? I am hearing conflicting opinions on this subject. Please clarify for me. Thank you.
Foreign insured persons under the national pension scheme are treated in the same manner as an insured Korean citizen. If a foreigner becomes eligible to receive an old-age, survivor or disability pension, he/she can receive his/her pension benefits under the Korean National Pension Act.
There is, however, a certain and unique distinction regarding the lump-sum refund. In general, a lump-sum refund is not paid to foreigners leaving Korea after having been covered under the scheme. However, foreigners who meet any of the following conditions may be eligible to receive the lump-sum refund:
� In cases where a foreigner whose home country grants Koreans a benefit corresponding to the lump-sum refund under the National Pension Scheme, based on the principle of the reciprocity. At present, the U.K, New Zealand and Russia, among others, are not engaged in such reciprocity with Korea and their citizens are thus not eligible for a lump sum refund.
� In cases where a foreigner whose home country has concluded a social security agreement with Korea regarding the payment of the lump-sum refund (As of January 2012, these are the United States, Canada, Germany, France, Australia, the Czech Republic, Hungary, and Belgium, Poland, the Slovak Republic, Bulgaria, Romania, Austria, Denmark, India).
� Regardless of nationality, in cases where a foreigner who has been covered under the national pension scheme, with an E-8 (Employment for Training), E-9 (Non-professional Employment), or H-2 (Visiting Employment) visa returns to his/her home country.
Q2: I have been teaching English at an elementary school in Gwangju for the past 24 months and I am planning on returning home at the end of my second contract. Could you please explain how I apply for the lump-sum refund of my pension contributions? Can I receive the money at the airport on the day of departure? Thanks.
A. 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 bank book (or a bank statement, or voided check) for the account to which you wish your refund to be transferred.You can also receive the refund in cash at Incheon Airport before you leave Korea. To do so, please first visit one of our regional offices and bring with you the aforementioned documents. You will need to submit one copy each, of our “Application for Lump-Sum Refund” and of our “Application for Lump-Sum Refund at the Airport,” and then receive a filing receipt. Please note that the hours of all regional NPS offices are 09:00~18:00. Airport payment is possible only in case your ex-employer files a termination of employment notice with NPS at least one day before your departure date.
Finally, you should visit our Incheon Airport office located in front of entrance gate A (East side) on the 1st floor and receive the “Receipt of Currency Exchange.” You may then receive your cash refund at Shinhan Bank in the airport. Our Incheon Airport office hours are: 09:00~17:00.
In order to receive your lump sum refund at the airport, you must depart on a weekday (as our office is closed on weekends and holidays) and between 11:00 AM and 24:00. We recommend, however, that you arrive at our airport office before 4:30PM, as it takes time for our staff to receive and process your documents.
Gwangju Regional Offices
Zip Code: 506-724
Address: 3rd Floor, Kukminyeongeum Gwangjuhoegwan Building (국민연금 광주회관), 1582-4 Usan-dong, Gwangsan-gu, Gwangju
Phone No.: (062) 958-2081
Fax No. : (062) 455-3002
How to get there: For Bus No.s 20, 29, 37 or 196, get off at the Odung Elementary School Bus Station then walk straight about 200 meters to Honam Hospital.
The Kukminyeonkum Gwangju Building is visible near both the Kukmin Bank and the Honam Hospital.
Dong-Gwangju Regional Office
Zip Code: 501-025
Address: 8th Floor, Amore-Pacific Building, 5 Gumnamro, Gwangju
Phone No.: (062) 230-0784
Fax No.: (062) 455-3022
How to get there :
– From the Gwangju Metro? Station, walk about 15 minutes toward the Amore-Pacific Building.
– Public transportation
① For Bus No.s 19, 38, 52, 57, 70, 170, 184 or 1187, get off at the Lotte Department Store Bus Stop.
② Subway: Travel to the Geumnamno 5-ga station anduse Exit No. 1. Reaching the office takes about 2 minutes.
Buk-Gwangju Regional Office
Zip Code : 500-864
Address : 2nd Floor, Songgang Building (송강빌딩), 80 Geumnamno, Buk-gu, Gwangju
Phone No.: (062) 520-8126
Fax No.: (062) 455-3042
How to get there : The office is across from HanGuknochong(한국노총) at the Yudong Intersection. Go to the second floor.
For more information, visit http://english.nps.or.kr/