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 contributions are, for most service industries, approximately 11% and employee contributions are approximately 9%.
Treaties
Korea has almost 40 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 inbounds expatriates to South Korea therefore continue to pay home country social security rather than Korean contributions.
Exemptions
Expatriates on foreign payrolls 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. This is regardless of their home country – so the exemption may be available to expatriates from non-agreement countries.
Administration
Inbound assignees who are exempt from Korean contributions under a bilateral treaty need to 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 are paid from the age of 60 in most cases.
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 upon permanent departure.
Social security insights are intended to provide quick and straightforward insights into social security regimes. Always seek professional advice based on actual circumstances before acting.
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