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What is the Korean National Pension?

What is the Korean National Pension Service | THE HAN GANG MAGAZINE
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Saving money in Korea should be the goal of every foreigner. But many expats living in Korea find the Korean pension system difficult to understand. In this article, I want to explain the Korean National Pension Service, why it is required, and its benefits.

Foreigners and the Korean National Pension Service

Many foreigners moving to Korea are not aware that all workers, including English teachers in Korea, must contribute to a national pension fund managed by the Korean government.

This is not a choice. But there are conditions under which you can apply for a lump-sum refund of your national pension contributions.

This is very important to know for all short-term expats living in Korea, as many end up leaving without claiming their rightfully earned pension money.

About the National Pension Scheme

The Korean National Pension Scheme is a Social Security System implemented by the Korean Government that collects contributions and pays pension benefits for the insured or their dependents in order to prepare for retirement or unexpected calamities such as disability and death.

Compulsory Coverage of the National Pension Scheme

Foreigners aged between 18 and 60 residing in Korea are subject to the compulsory coverage of the National Pension Scheme, the same as Korean nationals. Foreigners whose countries don’t cover Korean nationals under their public pension schemes, however, are excluded from coverage under the NPS.

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.

Payment Contributions

For workers in the workplace, the employees and their employers should make contributions for the employees amounting to 4.5% of the standard monthly income, respectively, based on the employees’ earned income.

Individually Insured Persons should make contributions amounting to 9% of their reported standard monthly income.

There is no discrimination in terms of the contribution rate between foreigners and Koreans. The payment should be made no later than the 10th day of the following month.

Piggy bank

Benefits

There are three classifications of benefits: If foreign insured persons are entitled to an Elderly, Disability, or Survivor Pension, they will receive pension benefits the same as Korean nationals.

Elderly Pension

The elderly Pension is paid monthly to those whose insured period is 10 years or more and are over 60 years old. The pensionable age will increase by 1 year every five years, starting from the year 2013, until it reaches 65 in 2033.

Disability Pension

The Disability Pension is paid to those with a disability after the treatment of diseases or injuries incurred during the insured period, according to the degree of their 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, a Survivor Pension will be paid every month to their surviving dependents whose livelihood was supported by the deceased person.

Korean National Pension Service

Lump-sum Refund

In principle, a lump-sum refund is not paid to foreigners, however, in the case of foreigners qualifying under one of the below conditions, leaving Korea permanently, or reaching the age of 60, a lump-sum refund equivalent to the amount of contributions paid plus the fixed interest is paid to them, or to their survivors if they should die.

① A foreigner whose home country has concluded a social security agreement with Korea to secure benefit rights by combining the insured period in each country.

② A foreigner whose country grants Koreans a benefit corresponding to a lump-sum refund.

③ A foreign worker whose stay visa falls under E-8 (Employment for Training), E-9 (Non-professional Employment), or H-2 (Visiting Employment).

Table - Countries exempt from lump-sum refunds - National Pension Korea

Application for the Lump-sum Refund

Required documents

Applying in Korea (before departing Korea): Application form, a copy of your ID card (passport & Alien Registration Card), a copy of your bankbook, a copy of your plane ticket, etc.

Applying overseas (after departing Korea): Application form (notarized from a notary agency of the country in which you reside and attested to by the Korean Consulate or Embassy) ② A copy of your passport ③ A copy of your bankbook

When you apply for a lump-sum refund through an agent in Korea, the application must be submitted only by mail in order to avoid extra administration fees and incorrect or false applications.

Contact Place: Regional offices of the National Pension Service (www.nps.or.kr ⇒Regional Offices)

Source: Korea National Pension homepage

Final Word

Now that you know about the Korean Natonal Pension Service, check out our guide on How to Check your Korean National Pension online and see for yourself how much (or how little) you have accrued.

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