Foreign Nationals Exploit Pension Payment Loophole
There is a growing number of cases where foreign nationals receive an old-age pension after subscribing to the National Pension for just one month in Korea and paying 119 months of past contributions in a lump sum. Critics point out that the postponed payment system, designed to protect the pension
Foreign nationals are exploiting a pension payment loophole in Korea by receiving old-age pensions after a brief subscription period and a lump sum payment of past contributions. This issue has surged significantly, with applications increasing 20 times from 43 cases in 2015 to 848 cases in 2024. The amount of payments has also skyrocketed 26.9 times, from 203.3 million won ($146,000) to 5,461,000,000 won.
Foreign nationals with specific visas, predominantly ethnic Koreans from China, are leveraging this loophole. For instance, Person A, a Chinese national, paid for 1 month of pension service and then contributed 119 months in a lump sum at age 60, receiving pension benefits. Person B, another Chinese national, met the 10-year subscription requirement through additional subscription, a lump-sum refund, and a 119-month postponed payment.
Critics argue this undermines the original purpose of the postponed payment system, which is to safeguard pension entitlements for those unable to pay due to job loss or childbirth. The system's administrative challenges, such as verifying residency, marriage, and family relations, complicate timely determination of overseas beneficiaries' statuses, particularly their death.
Consequently, there's a rising demand for reforms in postponed payment standards and pension entitlements for foreign nationals to ensure fairness and the system's sustainability.
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