Korean Job Discussion Forums

[Novernae]

I can't find any information in the archives about my question.

We renewed our last contract in July '07. Our employer never changed pension amount to reflect the new salary. I want him to pay the difference I believe he owes us. I've heard that there is an annual adjustment in April but can't find any reference to it. NPS says only that pension is based on taxable income, but that's all I can see that's relevant. As far as I'm concerned, that's all I need to show him.

My questions are these:

1. Is there an annual adjustment, and where can I read about it?
2. Has anyone else run into this, and if so, what did you do?

For the record, I'm Canadian, so I get it all back, so I obviously don't mind contributing my share.

Thanks for any help.

[crescent]

Yes, there is an annual pension adjustment in April. There is a Health Insurance adjustment also...

The reasons stem from what your school has reported as your annual income for the fiscal year. If your actual income is more or less than what was reported when you first started, then your April payment will be adjusted.

For example, if you just started working in Dec.2008, then your adjustment in April will show much less of a deduction.

On the other hand, if you received your severance, or if you worked overtime in the last year, then your adjustment will reflect a higher deduction.


Regarding your second issue:
If you want your boss to increase your pension payments according to your higher salary, all you need to do is take all the pay stubs showing the increased salary, and your Alien Registration Card to the pension office.
Although, how much of a raise are you talking about? A monthly increase of 200,000won only results in a pension increase of only 9,000/month, on your employer's part.
Is it worth it?

[Novernae]

Thanks for the reply.

The difference is 5 or 600,000 per month, so it's worth tracking down. And it runs from last July until now.

Thanks for the info. I'll talk it over with him and see if I can avoid the pension office visit. He's not terrible, he just doesn't do his own books and his accountant is dodgy.

[poet13]

Just so you know, after the tax exempt period, your employer may deduct 30% from your gross wages, and calculate pension from that.

For the purposes of taxes, foreigners taxes are calculated with a 30% deduction in gross wages off the top. Pension is only calculated from TAXABLE wages, so pension will be 30% less also.

[Novernae]

[poet13]

We and our employers each contribute about 4.5% of your wages to pension.

People from some countries are allowed to have a 2 year exemption from paying income tax.

Once that period is finished, everyone pays income tax.

Foreigners income tax is calculated differently than a Koreans income tax. We have a 30% gross wage deduction right off the top, before any other calculations are made.

The pension is deducted from TAXABLE wages, not GROSS wages. Hence, in order to figure out your pension deduction, you should multiply your gross wage by 30%, and calculate pension deduction from there.

So if you make 2.2 like me, your pension will be calculated from about 1.6 million, and only be about 71,000 instead of almost 100,000 per month.

[Novernae]

This 30% deduction is news to me. Can you give me a link to the regulation? For what it's worth, my employer doesn't seem to be doing that; I'm paying just over 100k/month in pension.

[poet13]

From the thread...."Pension reduced by 30%. Pension office reply. Big surprise."

"Thank you for your visiting and I am happy to answer your question.


Before talking on your matter, please refer to the following homepage first.

HOME > National Pension > National Pension Scheme > Coverage

It'll help your understanding regarding the Coverage under National Pension Service.



And, please refer to the following explanation:

An income, under the present National Pension Act, refers to earnings gained by offering "service", not including tax-free income as determined by the Presidential Decree.

According to Article 18-2 of " Restriction of Special Taxation Act" which includes provisions on the tax exemption for foreigners, the amount corresponding to 30/100 of your income earned in Korea is tax-free, so it is not included in the calculation of your pension contribution amount.



For more information, please contact our regional office :

HOME > Contact Information of Regional Offices



Have a good day!"