SOCIAL SECURITY AGREEMENT

by enaj Sat Sep 19, 2009 9:49 pm

Both Korean and foreign subscribers to the National Pension Service (NPS) should know the basic information and rules to benefit from the pension properly in order not to be missed out on the benefits.

Case one: Kim, an office worker who was dispatched to Germany for five years, had to pay premiums in both countries because both the respective pension systems are obligatory social services.

Kim paid 3.8 million won a year to the NPS, but when in Germany, he had to pay about 19.1 million won a year. It was unclear whether he would receive a pension from the European country after he returned to Korea and he felt the premium there might have been a waste of his money.

However, he soon learned that he did not have to pay premiums in Germany because the Korean and German governments signed social security agreement exempting pension premiums for their nationals in each other�s countries.

Case two: Lee, who stayed in the United States for nine years and returned to Korea, paid a total of around 100 million won into an American pension fund.

However, he did not fill the mandatory period to receive a pension and returned to Korea empty handed.

In Korea, he subscribed to the national pension for five years before being told he could receive a monthly payment.

Since the U.S. and Korea had signed a social security agreement, Lee�s having nine years in America was added to his Korean period of work making 14 years, higher than Korea�s minimum mandatory period of 10 years.

Lee has been receiving 1 million won every month since then.

In the past, some foreign subscribers used to complaining about their not being able to receive refunds or a pension though they have paid monthly premiums to the NPS. Foreigners subscribing to the national pension is obligatory under the International Labor Organization.

However, many people do not stay here for the mandatory period to receive regular pensions, and so return to their countries empty handed.

Dual Coverage

Social security pacts have allowed Kim, Lee and many others to benefit from the pension system based on what they paid to overseas organizations. The NPS explains that �the agreement is concluded to benefit the nationals of contracting countries through coordination of those countries� different social security systems.� The agreement eliminates dual coverage as seen in case of Kim ? a person pays just one premium to the system of either country.

The pact sometimes adds all payment periods, which enabled Lee to receive his pension early.

The service explains that longterm residents in foreign countries or immigrants, who have divided their careers between two countries, can acquire benefits eligibility according to the total periods of coverage in both countries.

According to the agreement, benefits are remitted overseas without restrictions even though a person stays in the other contracting country. Therefore, the person who has acquired benefit eligibility will not receive reduced benefits only because he or shy stays in the other contracting country.

For example, a nurse named Park, who worked in Germany and paid into the national pension scheme there, received 21 million won from the NPS in 2007. Since Germany signed the agreement with Korea in 2003 she was able to get a lump-sum amount for her increased pension benefits to cover 2003 to 2007.

The NPS is seeking to sign more pacts with other countries.

As of June 2009, Korea has signed social security agreements with 16 countries ? Iran, Canada, the United Kingdom, the United States, Germany, China, the Netherlands, Japan, Italy, Uzbekistan, Mongolia, Hungary, France, Australia, the Czech Republic and Ireland ? some of which allow the totaling of coverage periods.

People who want to use the services from such agreements should visit the international affairs center in Jongno. They should submit their identification, certificate of being a member in the national pension system or equivalent in Korea and in their respective countries. For more information, contact www.nps.or.kr., or call 02) 2176-8701~10.