Summary

South Korea has a broad-based social security system that provides individuals with retirement benefits, unemployment insurance, industrial accident and health coverage. It is not comprehensive in that it does not provide a full range of social welfare support, but it is universal.

Details

Contributions

Contributions to the various branches of Korean social security are calculated separately and using different income caps. Employer and employee contributions are, for most service industries, approximately 9%each, but the income caps limit contributions to the Pension and Health elements of the system to about $486 per month for the employer and the same for the employee. Contribution rates are due to start increasing from 2027, ultimately reaching 13% of capped income.

Only Employment Insurance (EI) and Workers’ Compensation Insurance are uncapped, although the former only applies to foreigners in Korea in visa categories D-7, D-8 and D-9. EI rates are low (under 1% for employees and 1-2% for employers).

.

Treaties

Korea has 41 bilateral social security agreements, including agreements with the UK, US, Canada, China, Australia and most European countries.

These agreements determine which country has the right the levy social security contributions, has the obligation to provide benefits, and prevent social security being levied twice on the same income. The majority also deal with the issue of pension totalization. Most inbound expatriates to South Korea therefore continue to pay home country social security rather than Korean contributions, and outbound Korean expatriates continue to be insured at home.

Exemptions

Expatriates on foreign payrolls who are not covered by a social security agreement can be exempted from the National Health Insurance portion of Korean social security if they are covered by employer sponsored foreign medical insurance or their home country’s statutory health insurance.

Administration

Inbound assignees who are exempt from Korean contributions under a bilateral treaty need to physically submit their certificate of coverage to the Korean National Pension service for validation. If contributions are due, they are all managed through monthly payroll withholding by the Korean host entity or, if there is no host entity, by the employing entity.

Benefits

The minimum contribution period (to either the Korean system or a treaty country system) for a Korean pension is ten years. Retirement pensions can normally be claimed from the age of 60 for those born before 1952, but the pension age is rising such that those born after 1969 can only claim the state pension from the age of 65. Early pension withdrawal is possible five years before the normal pension age.

Other

Foreign nationals who are not exempt from Korean social security and pay contributions while working there may be able to obtain a lump sum refund of their National Pension contributions upon permanent departure if they are from bilateral social security agreement countries

Employee contributions to both main elements of the social security system are tax deductible.

Need more specific advice?Ask an expert