Pension Refund for Foreigners in Korea
There are many questions and a lot of confusion among the foreign community in regards to the monthly pension deductions and pension refund. In fact, many foreigners don’t even know that they are eligible for a refund. So in this post, I will talk about the eligibility, requirements and how you can get your refund.
What is National Pension Service (NPS)?
The National Pension Scheme is a Social Security System implemented by the Korean government wherein the government collects monthly contributions from insured residents and citizens legally working and paying pension benefits for those insured or their dependents.
Exclusions from the National Pension Coverage
Like Korean nationals, foreigners aged between 18 and 60 who reside in Korea are subject to the compulsory coverage of the National Pension Scheme. Foreigners whose countries do not cover Korean nationals under their public pension schemes, however, are excluded from coverage under the NPS.
- Any national whose country’s pension system does not mandatorily cover Korean citizens.(The Republic of South Africa, Nepal, Maldives, Myanmar, Bangladesh, Vietnam, Saudi Arabia, Armenia, Swaziland, Ethiopia, Iran, Egypt, Tonga, Pakistan, Fiji, Cambodia, Singapore, Belarus, East Timor, and Georgia, Nigeria and Malaysia do not mandatorily cover Korean citizens under their pension schemes)
- Foreigners who are not registered according to the Immigration Act, or to whom a forced deportation order has been issued under the same Act, or who are
staying in Korea without being permitted to extend their terms of sojourn.
- Foreigners whose stay status is applicable to any of the following: D-1, D-2, D-3, D-4, D-6, F-1, F-3, or G-1
- Foreigners who are excluded from the National Pension Coverage By the Social Security Agreement.
Countries eligible for lump-sum refunds (45 Countries)
If a foreign insured person fulfills eligibility to receive an Old-age, Survivor or Disability pension, he/she can be paid any of the pension benefits on the basis of the Korean National Pension Act.
There is no discrimination in terms of benefit amounts and remitting benefits abroad, etc. But there is a certain distinction regarding a Lump-sum Refund. In principle, a Lump-sum Refund is not paid to foreigners leaving Korea after having been covered under the scheme.
But, to foreigners falling under any of the following conditions, a Lump-sum Refund will be paid.
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 visa is either E-8, (Employment for Training) E-9 (Non-Professional Employment), or H-2 (Visiting Employment).
Via Reciprocity : Barbados, Belize, Bermuda, Bhutan, Cameroon, Colombia (spelled incorrectly last time), Congo, El Salvador, Ghana, Grenada, Hong Kong, India, Indonesia, Jordan, Kazakhstan, Kenya, Malaysia, Nigeria, the Philippines, Saint Vincent and the Grenadines, Sri Lanka, Sudan, Switzerland, Thailand, Trinidad and Tobago, Togo, Turkey, Tunisia, Uganda, Vanuatu, Venezuela and Zimbabwe
By Agreement : Australia, Austria, Belgium, Bulgaria, Canada, the Czech Republic, France, Germany, Hungary, Poland, Romania, Slovakia and the United States.
Eligibility
Foreigners residing in Korea are subject to the compulsory coverage of the National Pension Scheme, just like Korean nationals. If a foreigner aged between 18 and 59 is working at a workplace covered under the scheme, he/she shall be a Workplace-based Insured Person, or an Individually Insured Person compulsorily. So, Foreign workers who have contributed to the National Pension Scheme while they were working in Korea and fall under any of the above category are entitled to a lump-sum refund.
Pension contributions
The employees and their employers should each make contributions amounting to 4.5 percent of the employee’s standard monthly income, for a total contribution equal to 9 percent of the employee’s monthly income. So basically the contribution is split 50/50 between the employer and the employee. However, in the case of individually insured individuals, the person should make contributions amounting to 9 percent of their reported standard monthly income.
How to apply
You can apply for the pension refund before leaving Korea or from abroad. The process is slightly different however.
- Applying before departing from Korea (for applicants in Korea)
- The person who is entitled to a lump-sum refund can apply for it prior to their departure from Korea by visiting their local NPS office with the following documents:
- <Required documents>
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An application for Lump-sum Refund (This form is available at any local office.)
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Passport of the insured person
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Alien registration card of the insured person
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Proof materials of the insured person’s bank account (such as a bank statement, voided check, or bankbook showing the applicant’s name and account number, etc.)
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Flight (or ship) ticket (the date of departure has to be within a month from the date of application)
Applying overseas, after departing Korea
The applicant has to fill out the forms and send them with the required documents. Before mailing the application, the applicant needs to have the whole application notarized by a notary public and then apostilled (or attested by the local Korean consulate).
<Required documents>
An application for a Lump-sum Refund
A copy of the passport of the insured person
Proof of the insured person’s bank account (such as a bank statement, voided check, or bankbook showing the applicant’s name and account number, etc.)
In the case of overseas remittance: application for overseas remittance is additionally required.
When applying 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.
Also be aware that the copy of bank book, does NOT mean your Korean bank account. They want a statement from your bank in your home country where you want them to wire the money. They need your account and routing information and the address of your bank back home.
Lump sum payment at the airport
NPS is now providing payment service for foreigners who leave Korea through the Incheon Airport. Payment at the airport is applicable only when the applicant leaves on a flight from11:00 to 24:00, Mon to Fri. (not available on official holidays) and the ex-employer of the insured person makes a disqualification report to NPS at least one day before the departure date.
Required Documents
Passport and alien registration card of the insured person
Flight ticket with a departure date within a month
proof of the beneficiary’s bank account (in case there is an additional payment or failure of airport payment)
How to apply
The applicant has to visit their local office within a month of departure and apply for a Lump-sum Refund. The applicant should choose the airport payment as the method of payment. After you submit your application you will receive a ‘Filing Receipt’.
At Incheon Airport Office, on the day of your departure, hand in the filing receipt, passport, alien registration card and flight ticket. You will receive the “Direction for Payment of a Lump-Sum Refund”. Go to ACE Foreign Exchange Booth of Shinhan Bank at the airport and hand in the “Direction for Payment of Lump-sum Refund” and your passport. You will then receive the “Receipt of Currency Exchange.”
Next take the “Direction for Payment of a Lump-Sum Refund,” “Receipt of Currency Exchange” and your passport, to Dojeon Foreign Exchange Booth of Shinhan Bank (in front of the 43th boarding gate) and here you can withdraw the exchanged money.
NPS is very efficient and generally willing to facilitate the process as much as possible for foreign claimants. In some cases, where the applicant did not have documentation regarding their account, the NPS arranged to send them the refund by cheque to their address in their home country (or to that of a relative, etc). So just talk to them and see what can be done if you run into any issues.
This information is based on the information available at the NPS website. At times, it is difficult to obtain clear and complete information in Korea and also rules can change quickly, so please see this as a guide and confirm with the appropriate Korean government authorities to get the most current answers.
More information can be found on the National Pension Scheme website http://www.nps.or.kr/. Click on English – on the English Page look to the right to the map of Korea, click on Go>> and the list of offices will appear. For any additional information or questions that you might have I suggest using ‘The Immigration Contact Center’.It consists of Hi Korea (http://www.hikorea.go.kr/)which is one of the best sites for helping foreigners with online information and guidance or call 1345 telephone counseling service. They offer options for many languages including Korean, English, Japanese and Chinese. They have fluent English speaking staff and are very helpful.