The National Korean Pension Plan

Category : Career/Business / Surviving in Korea / Visa/Legal Issues/Tax
Nov 28, 2014

You might be doing some grumbling about the deductibles coming out of your salary each month. It’s always disappointing when you are not taking home as much money as your contract stipulates. However, before you bubble over in rage, know that money taken out of your paycheck is actually for your benefit. The Korean government has created a set of social security insurances. These programs aim to provide comprehensive coverage for Korean citizens as well as foreigners. There are four social security programs included: the national pension plan, national health insurance, employment and labor insurance, and worker’s compensation. For the most part, these programs are based on co-payment whereby the employer pays a percentage and the employee pays a percentage.


Here are some quick facts about the four different types of insurances provided:


National Pension

National Health Insurance

Employment and Labor Insurance

Worker’s Compensation Insurance

Qualification for Enrollment

-Provided for employees of a company with more than 1 employee

-there are some exceptionsfor certain nationalities and visa statuses

-Provided for employees of a company with more than 1 employee

- Some visa statuses must pay for it themselves

-It’s a voluntary insurance provided for employees of a company with more than 1 employee

-Foreigners do not automatically receive this insurance

-Provided for employees of a company with more than 1 employee

-Available to all visa statuses and nationalities

Monthly Insurance Bill

Employer: 4.5%

Employee: 4.5%

Total: 9%

Employer: 2.945%

Employee: 2.945%

Total: 5.89%

(long-term care insurance is separate- 6.55% of each health insurance bill)

Employer: 0.8%~1.4%

Employee: 0.55%

Employer must pay

Contact Agency

Phone: 1355


Phone: 1577-1000


Phone: 1588-0075, 1350


– click ‘The Philippines’ for English


Phone: 1588-0075



All insurances cover a different area of social security. The application process, coverage and application eligibility also differs for each one. Please check the articles on Korean National Health Insurance and on Worker’s Compensation and Employment Insurance in Korea for detailed information.


This article outlines the National Pension Plan set forth by the National Pension Service (NPS).


What is the National Pension Plan?


The national pension plan is a mandatory social security insurance that all employed Koreans between the age of 18 and 60 must pay into. The plan is aimed to support people and families during old age. It enables workers to retire at the age of 60. It is also designed to be a security fund for beneficiaries in case of the death or disability of the main income earner in a family. If a Korean is employed by a company he/she must contribute into the national pension plan. It is also possible to contribute individually if a person is self-employed. This person pays as an individually insured person rather than a workplace insured person. This can apply to foreigners working in Korea too. There are a few circumstances when a person can voluntarily contribute or be exempt. Some cases include students, military service, people who have a full pension provided by their work (government officials, private school teachers, military personnel) and unemployed people.


What about for Foreign Nationals?

It is also mandatory for most foreign nationals employed at a Korean company and between the age of 18 and 60 to pay towards a pension. You may also contribute if you are self-employed in Korea and have the proper working visa. You may be wondering why expats must pay into a retirement fund if they are most likely not going to retire in Korea. The NPS has thought of that! They have created a payout scheme to do deal with such cases. Foreigners receive a lump-sum payment at the end of their contract and/or when they decide to leave Korea. In some cases, you may add this money directly to the national pension plan from your own country and in other cases, you may use the money as you deem fit.


There are rules and restrictions about which nationalities and visa statuses pay into the national pension plan. Check the following table to determine if you will be dinged each month for this security insurance.


English Speaking Countries

There are seven recognized English speaking countries: Australia, Canada, Ireland, New Zealand, South Africa, the UK, and the USA. Of the seven countries six must pay into the national pension plan, Australia, Canada, Ireland, New Zealand, the UK and the USA. However, of those six countries only three are eligible to receive their pension back at the end of their contract in Korea. These three countries, Australia, Canada, and the USA have reciprocal pension agreements with Korea. The other three countries, Ireland, New Zealand the UK do not have government agreements. South African citizens are not required to pay into a pension and therefore they do not receive any pension payment at the end of their contract.



  1. If you are a national from a country that is required to contribute to a national pension, it is illegal for your employer not to pay into a pension plan for you. If you notice that you are not paying a monthly fee for your pension plan, demand that your employer register a plan for you. It is in your best interest that your employer does so.
  2. If you come from a country not listed below, you must pay into the national insurance plan.



Country / Visa Status

Nationals who must contribute to a workplace or  individually insured pension plan

(66 countries)

Guyana, Cape Verde, Greece, Holland, Norway, New Zealand, the commonwealth of Dominica, Germany, Denmark, Latvia, Russia, Rumania, Luxembourg, Libya, Lithuania, Liechtenstein, Monaco, Morocco, Mauritius, Moldova, Malta, the USA, Barbados, Bahamas, Bermuda, Belgium, Bulgaria, Brazil, Serbia, Switzerland, Sweden, Spain, Slovakia, Slovenia, Argentina, Iceland, Ireland, Albania, Azerbaijan, Estonia, Britain, Austria, Australia, Uruguay, Uzbekistan, the Ukraine, Israel, Italy, Japan, Jamaica, China, Czech, Canada, Croatia, Cyprus, Tanzania, Tunisia, Trinidad and Tobago, Panama, Portugal, Poland, France, Finland, the Philippines, Hungary, HongKong

Nationals who must contribute to a workplace pension plan, but who are exempted from individually insured plans

(43 countries)


Ghana, Gabon, Grenada, Nigeria, Taiwan, Laos, Lebanon, Malaysia, Mexico, Mongolia, Vanuatu, Venezuela, Belize, Bolivia, Saint Vincent, Grenada, Sudan, Sri Lanka, Sierra Leone, Haiti, Algeria, Ecuador, El Salvador, Yemen, Jordan, Indonesia, Zimbabwe, Cameroon, Kazakhstan, Kenya, Costa Rica, Cote D’lvoire, Congo, Colombia, Kyrgyzstan, Thailand, Turkey, Togo, Paraguay, Peru

Not compulsory nationals

(20 countries)

Georgia, South Africa, Singapore, Nepal, East Timor, Maldives, Maldives, Bangladesh, Vietnam, Belarus, Saudi Arabia, Ethiopia, Egypt, Iran, Egypt, Cambodia, Tonga, Pakistan, Fiji

Exempted due to visa status


A-1(Diplomacy), A-2(Government duties), A-3(Agreement), B-1(Visa exemption), B-2(Tourist visa), C-1(Short-term coverage activities), C-2(Short-term business), C-3(Short-term synthesis), C-4(Short-term working), D-1(Culture-art), D-2(Student), D-3(Industrial training), D-4(Training), D-6(Missionary work), F-1(Visiting), F-3(Accompany), G-1(ETC)




Registering for the National Pension Plan

For workplace-insured persons

If you are insured under your company, the process is relatively straightforward. Your employer will make the necessary arrangements for you, but you will need to provide:

  • A copy of your Alien Registration Card (ARC),
  • A copy of your passport; and
  • A certificate of income.

For Individually-insured Persons

If you will be paying into a pension yourself, you will need to visit a NPS office near you. They are located all over the country and in Seoul there are 18 offices alone. You will need to bring:

  • Your passport;
  • Your ARC;
  • A certificate of income; and
  • An application form found at the pension office.


Paying the National Pension

All people must contribute 9% of their monthly salary into their pension plan. This percentage is not fixed. The NPS calculates this percentage based on economic needs and the cost of living. It will remain at 9% until 2013, at which it will be reevaluated. The pension payment is due on the tenth of every month.


For Workplace-insured Persons

If you are working for a Korean company a co-payment method will be applied. Your portion will be deducted directly from your salary on the tenth of every month. Your employer will collect your payment and pay it on your behalf, along with their contribution for you.

  1. 50% of the monthly pension contribution will be made by your employer and 50% will be made by you.
  2. The percentage you pay of your monthly salary is 4.5% and it is the same for your employer.


For Individually-insured Persons

As an individually insured person, a co-payment method does not apply. You are responsible for paying your monthly fee. You may do so via bank transfer or automatic bank deposit. Please see the article on Paying Bills in Korea for more information.

  1. You are responsible for 100% of the pension contribution.
  2. You will pay 9% of you monthly wage.


Benefits of the National Pension

As mentioned, the national pension act relieves financial strain on both the younger and older generations. The elderly are able to retire or cease working, while the employed sector of society does not feel burdened to take care of the aging population. There are five ways in which a person or family can claim National Pension benefits:

  1. Old-Age Pension: the old-age pension is a monthly grant for the duration of the retired person’s life. It can be received as a full, reduced, active, or early pension. Eligibility begins at the age of 60 when the person has been employed for at least 10 years. The age for this pension will be extended to 61 years old starting in 2013. It shall be increased by one year every five years until the age of retirement is 65years in 2033.
  2. Disability Pension: the disability pension is provided to a person with sudden physical or mental disability that remains after treatment. The disability must have occurred during the insured payment period and the employee must have been paying into the pension until the subsequent accident or disease. It shall be given depending on the degree of disability. Levels 1-3 disability receive a monthly pension payout, while level 4 disability receives a lump sum refund.
  3. Survivor Pension: the survivor pension shall be given monthly to the surviving family in the event of the death of an insured person. The insured person must have been contributing to the pension plan in order for the beneficiaries to receive it.
  4. Lump-sum Benefits: lump-sum benefits means that the total (or a significant portion) of the pension is paid out directly in one large amount to the insured person. A lump-sum payment is usually made in the case of early death when the survivors are still of working age or in the case of disability.


àNote: If you are a foreign national who has been (or will be) working in Korea for an extended period (longer than 10 years) and retiring in Korea, you are eligible to receive the pension as an old-age pension after the age of 60. In most other circumstances including death, you (or your beneficiaries) will receive a lump-sum payout.



  1. Phone: 02-2176-8700 (English, Japanese, Chinese, Thai, and Indonesian) or 1355 (Korean) weekdays 8:00-19:00
  2. NPS Website in English
  3. There are 18 NPS District Offices in Seoul and one in every city in Gyeonggi province. Please refer to the contact details for exact locations.


Image courtesy of David H. Webster.

Tags : Tax. Pension. Work. Job.

Lindsey lived and worked in Seoul, South Korea for over 5 years. While there, she dabbled in different areas of work and explored the culture. She spent time teaching elementary students, business English to adults and high school students about college preparation. She also studied Korean, wrote blogs and tasted as many foods as she possibly could including fermented skate fish. Over the years, Lindsey developed a love for Korea and the culture. She is keen to share her knowledge of Korea with others and she will always consider Korea a second home.