Social Security Agreement for Australians

□Introduction

Foreigners 18-60 years old who are residing and working in Korea, regardless of their nationality, should be covered under the National Pension Service (NPS). Foreigners whose countries do not cover Korean nationals, however, are excluded from the coverage of NPS. Even so, if there are relevant provisions under the Social Security Agreement (SSA) between Korea and any foreign countries, those provisions will be applied.

 

To protect the rights of foreigners, the SSA is publishing a series of articles spotlighting SSAs in cooperation with Gwangju News. This month’s featured SSA is for foreigners from…

 

□Australia

◯SSA between Korea and Australia entered into force : Oct. 2008

 

◯Exemption from Dual Coverage

※Provisions concerning exemption from dual coverage is regulated on the payment of Korean National Pension contributions and Australian Superannuation Guarantee contributions.

①In general, an employee is subject to the legislation of a contracting country in which he/she is employed.

②A person who resides in Korea and is engaged in self-employment in Korea and Australia is subject to the Korean National Pension Scheme.

⇒Australian Superannuation Guarantee doesn’t mandatorily cover a self-employed person. Therefore, a person who resides in Australia and is engaged in self-employment in Australia can choose to be covered under the Superannuation Guarantee program or not.

③A detached worker is exempt from being covered under the legislation of the country which he/she is sent to for less than 5 years if he/she is covered under the legislation of his/her home country.

* In the case that agencies of both contracting countries agree on, the exemption period may be extended.

 

◯Benefits under this agreement

※With regard to benefits under the agreement, in Korea, National Pension coverage shall be taken into account, while in Australia, a period of residence under the social security system shall be considered.

Even though your periods of coverage in one country are not sufficient to qualify for old-age pension benefits, you may be eligible for old-age pension benefits after this agreement has entered into force. This is possible due to totalization of coverage in both countries.

①Korean National Pension Old-age Pension Benefits under the SSA – If you have more than 12 months of insured period in Korea but do not have enough periods of coverage (more than 10 years) to qualify for old-age pension benefits under the Korean National Pension Scheme, you may be able to qualify for Korean old-age pension benefits by totalizing periods of coverage under the Korean pension system and periods of Australian working life residence. However, those periods of Australian working life residence creditable must not coincide with the periods under the legislation of Korea.

* In this case, a period of Australian working life residence means a period during which a person is employed or self-employed during periods of Australian working life residence under the Australian legislation which is between 16 years old and pensionable age for an old-age pension.

– Your benefit is calculated by dividing the Korean periods of coverage by the total periods of coverage and then multiplying by the benefits amount (Theoretical Benefit). The benefits amount (Theoretical Benefit) is calculated based on the totalized periods in both countries.

②Australian Old-age Pension Benefits under the SSA – If you have been an Australian resident for less than 10 years but had one continuous residency period of more than 5 years, you may be able to qualify for Australian old-age pension benefits by totalizing periods of Australian residence and periods of coverage under the Korean National Pension Scheme. However, those periods creditable under the Korean pension system must not coincide with the periods of Australian residence; or

– If you have been an Australian resident for less than 10 years and don’t have a continuous residency period of more than 5 years, you may be able to qualify for Australian old-age pension benefits by totalizing periods of Australian residence and periods of coverage of more than 5 years under the Korean National Pension Scheme. However, those periods creditable under the Korean pension system must not coincide with the periods of Australian residence; and

– Your old-age pension benefit is calculated by taking into account; periods of Australian residence, country of residence, income and property and other pension benefit amount, etc.

* If you apply for the benefits in another country rather than Australia, you must have more than 12 months of periods of Australian working life residence (at least 6 months continuously).

* In this case, a period of Australian residence means that a period during which you who has citizenship or the right of permanent residence actually reside in Australia. A period of Australian working life residence means a period of residence between 16 years old and pensionable age for an old-age pension under the Australian legislation regardless of being engaged in income-earning activities or not.

③A person to whom this agreement applies is treated equally by a contracting party in the application of its legislation regarding eligibility for and payment of benefits.

④Korean lump-sum refunds are granted to Australian nationals based on the agreement. However, lump-sum refunds can be paid to nationals of a third state only in accordance with the reciprocity principle under the National Pension Act.

⑤There is no lump-sum refund clause under the Australian social security system, and as such any lump-sum refund won’t be granted to Korean nationals under this agreement.

⇔However, regardless of this agreement, a pension benefit can be paid in a lump-sum under the Superannuation Guarantee of Australia.