Pension
All employers must enroll employees (including a company's representative director) in the National Pension Scheme. Foreigners aged between 18 and 60 residing in Korea are also subject to the compulsory coverage of the National Pension Scheme. The retirement age is 62, gradually increasing to 65 by 2033. However, employees aged 60 years or older and casual or temporary employees, as defined under the relevant laws, are exempt from mandatory enrollment.
Employees are eligible to receive a full retirement pension if they have paid contributions for at least 20 years. The old-age pension comprises a Basic Pension Amount (BPA) and an Additional Pension Amount (APA) or Dependent Supplement. Employees who have reached retirement age but have paid less than 10 years of contributions are eligible to receive a lump sum old-age grant in their total contributions.
Employees and employers are liable to pay contributions to the National Pension Scheme. Employers and employees equally share the cost burden of pension contributions, which total 9% of monthly employment income. This means employers and employees must contribute 4.5% of monthly employment income.
For the application period of July 2024 to June 2025, the income ceiling for insurance contributions is KRW 6,170,000 (South Korean won), and the minimum monthly income used to calculate contributions is KRW 390,000.
Dependents/Survivors Benefits
Per South Korea's labor law, the survivor pension is available to an insured's widow, a widower if the widower is aged 60 or older (or a widower of any age with a first-or second-degree disability), parents and grandparents (including the spouse's parents or grandparents) aged 60 or older (or of any age with a first-or-second-degree disability), and children and grandchildren younger than age 25 (or of any age with a first-or second-degree disability).
The survivor's pension is paid upon the death of an insured person (the deceased must have paid 66.7% of scheduled contributions on time, except when the unpaid coverage period is less than six months), an old-age pensioner, or a disability pensioner with a first-or second-degree disability.
If the deceased had contributed for at least 20 years, the pension is 60% of the deceased's basic monthly pension amount (BPA); if they had ten to 19 years of contributions, the pension is 50%; if they have less than ten years of contributions, the pension is 40%.
The BPA is 1.29 (decreasing by 0.015 a year until reaching 1.2 in 2028) multiplied by the sum of the average indexed national monthly wage in the three years immediately preceding the year in which the pension is first paid and the insured's average monthly wage over the insured's total contribution period. An increment is paid for years of coverage exceeding 20 years.
Invalidity Benefits
Per South Korea's labor law, a disability pension is paid (according to the degree of disability) to individuals with a disability occurring after the treatment of diseases or injuries incurred during the insured period. Annuities are paid to those with first, second, and third-degree disabilities, and lump-sum benefits are paid to those with fourth-degree disabilities.
Disability pension is calculated according to the degree of disability and the insured's monthly Basic Pension Amount (BPA). For a first-degree disability, 100% of the insured's BPA is paid, whereas 80% is paid for a second-degree disability, and 60% is paid for a third-degree disability.
The current BPA is 1.29 (though this is decreasing by 0.015 a year until it will reach 1.2 in 2028) times the sum of the average indexed national monthly wage during the three years immediately prior to the year of the first pension payment and the insured's average monthly wage over the entirety of the contribution period. An increment is paid for coverage years exceeding 20 years.