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LifestyleGuide for Expats
Departing Korea, how do I get my pension payments refunded?Jeju National University Law School answers your questions
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Regarding the national pension refunds for foreigners who worked here and now are departing Korea, there is a lot of contradictory information on the Web. I went to the National Pension Service Web site (nps.or.kr) but found it too confusing.

Some say there are agreements with all countries, while some deny this. Others claim that their country was previously not part of the refund agreement but now is, and say the refund would be retroactive.

I’d like the definitive answer on who is legally entitled to these refunds and how to get them. If possible, could you give us answers for the US, UK, Canada, and Australia?

Dear Reader,

In principle, a lump-sum refund is not paid to foreigners leaving Korea after having been covered under the National Pension Scheme. But if foreigners fall under any of the following three conditions, the refund is paid.

¨ç In cases where a foreigner whose home country has concluded a social security agreement with Korea regarding the payment of the lump-sum refund.

¨è In cases where a foreigner whose home country has concluded a social security agreement with Korea regarding the payment of the lump-sum refund.

¨é Regardless of nationality, in cases where a foreigner who has been covered under the national pension scheme with a stay visa of E-8 (Employment for Training), E-9 (Non-professional Employment), or H-2 (Visiting Employment) returns to his/her home country.

The social security agreement is divided into two types, a totalization agreement and a contributions-only agreement. The former includes provisions on totaling of periods of coverage between two countries as well as the elimination of dual coverage. Since nationals of the contracting country under a totalization Agreement are treated equally with Korean nationals regarding benefit payment, they are eligible for a lump-sum refund as well as pension benefits. Therefore, if a person meets the conditions of entitlement for the lump-sum refund, the refund may be paid to him or her. Canada (after May 1, 1999), the United States (after April 1, 2001) and Australia (after Oct. 1, 2008) are the contracting countries under a totalization Agreement with Korea. Therefore, if a national of Canada, the US or Australia permanently leaves Korea, he or she can receive the lump-sum refund upon his or her claim.

On the other hand, a contributions-only agreement includes elimination of dual coverage of social security systems but does not provide totaling of periods of coverage. Provisions concerning benefits such as totaling of periods of coverage, protection for entitlement to benefit, equal treatment, and payment of the lump-sum refund are generally not included. The United Kingdom (after Aug. 1, 2000) is a contracting country under a contributions-only agreement with Korea, and there is no provision concerning payment of the lump-sum refund in the agreement. In addition, the UK does not grant Koreans a benefit corresponding to a lump-sum refund under the national pension scheme. Therefore, under the reciprocity rule, a Korean lump-sum refund is not paid to the nationals of the UK.

However, if a UK national satisfies the third condition described above, he or she can get the lump-sum refund. In other words, a foreigner eligible for the lump-sum refund is as follows:

-a person who is employed at a workplace covered by the national pension as a foreign worker stipulated in the Act on the Employment, etc. of Foreign Workers (falls under E-9 or H-2 visa status under the Enforcement Decree of the Immigration Control Act)

-a person who is employed at the workplace covered by the national pension as a person who has status of sojourn eligible for doing industrial trainee activities and doesn’t desert designated training places during required training period under Article 10 of the Immigration Control Act (falls under E-8 visa status under the Enforcement Decree of the Immigration Control Act)

The Lump-sum Refund shall be calculated by adding the contributions which a person has paid during his or her insured period to interest on the sum during the same period, and interest earned until the day on which the person becomes eligible to receive his or her pension benefits. The interest rate applied to the benefits is determined by taking an average from nationwide banking institutions established under the Banking Act, announced Jan. 1 of each year.

If a foreigner applies for a lump-sum refund because he or she is going to return to his or her home country, he or she must first visit one of the regional NPS offices and bring with him or her several documents including his or her Alien Registration Card, passport, an airline ticket to confirm his or her emigration from Korea (the date of departure must be less than one month from the date of his or her claim), and a bankbook (or a bank statement, or voided check) for the account to which he or she wishes the refund to be disbursed.

Ko Min Jeong is a graduate student at Jeju National University Law School and a legal counselor at the JNU’s Legal Clinic. JNU graduate student Son Minsoo contributed to this article.

Disclaimer: The information provided here is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered in Korea. Readers should consult a lawyer for detailed legal advice. As a service to the non-Korean community, the Jeju National University Legal Clinic (064-754-2989) is available for consultations during regular business hours, Monday to Friday.

¨Ï Jeju Weekly 2009 (http://www.jejuweekly.net)
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