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MattHart09
Joined: 27 Jan 2009
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 Posted: Tue Feb 22, 2011 2:21 pm Post subject: URGENT - Pension Contributions |
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Long story short, I'm finishing my contract this week. Went to pension office, and my pension is extremely low after two years of working with the same company. I checked my pay stubs, and the school only contributed 4.5% pension of ONLY 70% of my income.
I went and talked to them and they said this is legal.
Anyone have any experience with this sort of thing? Any help is appreciated |
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winterfall
Joined: 21 May 2009
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| Posted: Tue Feb 22, 2011 4:49 pm Post subject: |
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I had the same problem. School only reported 85% though. Its not legal, you need to file a complaint with the pension office. Show them your paystubs. Its better if you go to a fluent english speaking office. Most of them don't speak english too well and they're say anything to get you to leave including "Yes it is legal". Seems like a lot of people on dave's got that line
As soon as the pension office orders the school for the paperwork the change is immediate. You'll notice it with your next paycheck. But be warned they will take out a lump sum from your last paycheck to make up the difference from your end. |
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Ramen
Joined: 15 Apr 2008
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| Posted: Tue Feb 22, 2011 6:02 pm Post subject: |
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just don't understand why people check these things at the last minute before leaving korea.  |
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jrwhite82
Joined: 22 May 2010
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| Posted: Tue Feb 22, 2011 6:07 pm Post subject: |
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| I'm pretty sure someone else started a thread about this a couple of weeks ago, and it is in fact legal to report only 70% of your income to pension. |
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nathanrutledge
Joined: 01 May 2008
Location: Marakesh
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| Posted: Tue Feb 22, 2011 9:37 pm Post subject: |
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| jrwhite82 wrote: |
| I'm pretty sure someone else started a thread about this a couple of weeks ago, and it is in fact legal to report only 70% of your income to pension. |
But it's not anymore.
The tax rules used to allow foreigners to exempt 30% of their income from taxation, and the pension office allowed businesses to do the same thing - only pay on 70% of the income. It was a loophole.
NOW, the tax rules have changed - no more 30% exemption. Thus, if a business is still doing that, it's wrong and needs to be corrected. |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Tue Feb 22, 2011 9:58 pm Post subject: |
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| The 30% exemption was abolished on Dec. 31st, 2009. From January 1, 2010, your pension should have been calaculated on 100% of your earnings. Prior to 2010, your employer could get away with only 70% contributions (even though it was wrong and was to be applied only for income tax purposes at tax settlement time). |
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Ramen
Joined: 15 Apr 2008
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| Posted: Tue Feb 22, 2011 10:02 pm Post subject: |
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| OculisOrbis wrote: |
| The 30% exemption was abolished on Dec. 31st, 2009. From January 1, 2010, your pension should have been calaculated on 100% of your earnings. Prior to 2010, your employer could get away with only 70% contributions (even though it was wrong and was to be applied only for income tax purposes at tax settlement time). |
wrong. it starts this year (2011) because the average of last year's (2010) income which they apply calculating the pension contribution. |
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OculisOrbis
Joined: 17 Jul 2006
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big_fella1
Joined: 08 Dec 2005
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| Posted: Tue Feb 22, 2011 11:48 pm Post subject: Re: URGENT - Pension Contributions |
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| MattHart09 wrote: |
Long story short, I'm finishing my contract this week. Went to pension office, and my pension is extremely low after two years of working with the same company. I checked my pay stubs, and the school only contributed 4.5% pension of ONLY 70% of my income.
I went and talked to them and they said this is legal.
Anyone have any experience with this sort of thing? Any help is appreciated |
This scam exists due to the laziness and inefficiency of the pension office. It is illegal but you can't do anything about it unless they have been taking 4.5% of your whole income and only paying 9% on 70% of your income, I believe the pension office will then act, but who knows. |
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interestedinhanguk
Joined: 23 Aug 2010
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| Posted: Wed Feb 23, 2011 2:32 am Post subject: |
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Posting from another thread I contributed:
I talked to the pension office about this in 2009 and 2010. I was at the same school both years.
In 2009 my school was legally able to base pension (4.5%) each on 70% of my total salary. So, if I made 2,000,000 won, they could report income as 1,400,000 (.7*2,000,000). Then we would each pay 63,000 per month (.045*1,400,000).
Supposedly the basis for this was that only 70% of my salary was taxable or something (I believe because I'm a foreigner).
I signed a new contract in Feb 2010. My salary increased for signing for a second year. I called the pension office to clear things up about my new rate and just to check up.
It turns out that in 2010, employers had to base pension on 100% of income (unlike 70% in the previous year). HOWEVER, if one had worked at the same place (as I had) in 2009, the employer could still base pension on 70% of income. This is regardless of the fact that I had a new contract and new salary.
Therefore, if I had changed schools in 2010, my new employer would have to base pension on 100% of salary. Since I stayed with the same school from 2009, my pension was based on 70%.
This was all legal and standard by the pension office (I spoke with a fluent English speaker at the office). |
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MattHart09
Joined: 27 Jan 2009
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| Posted: Wed Feb 23, 2011 2:54 am Post subject: |
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| Thanks so much for the info. Some shady business they run here. In my case, I've been at the same school for two years as well |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Wed Feb 23, 2011 8:48 am Post subject: |
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| interestedinhanguk wrote: |
Posting from another thread I contributed:
I talked to the pension office about this in 2009 and 2010. I was at the same school both years.
In 2009 my school was legally able to base pension (4.5%) each on 70% of my total salary. So, if I made 2,000,000 won, they could report income as 1,400,000 (.7*2,000,000). Then we would each pay 63,000 per month (.045*1,400,000).
Supposedly the basis for this was that only 70% of my salary was taxable or something (I believe because I'm a foreigner).
I signed a new contract in Feb 2010. My salary increased for signing for a second year. I called the pension office to clear things up about my new rate and just to check up.
It turns out that in 2010, employers had to base pension on 100% of income (unlike 70% in the previous year). HOWEVER, if one had worked at the same place (as I had) in 2009, the employer could still base pension on 70% of income. This is regardless of the fact that I had a new contract and new salary.
Therefore, if I had changed schools in 2010, my new employer would have to base pension on 100% of salary. Since I stayed with the same school from 2009, my pension was based on 70%.
This was all legal and standard by the pension office (I spoke with a fluent English speaker at the office). |
^ Correct.
The Pension Office tried to get our Wonjangnim to change from paying on 100% to paying on 70% at that time. The Wonjangnim felt that it was unfair to the teachers and wrong to use this loophole to save a small amount of money and that it was in the spirit of our agreement with the teachers to contribute 4.5% of 100% of the pay level.
The National Pension Office calculates the monthly contributions for each teacher. It's only at 4.5% based on salary alone during the first year. In subsequent years they take other factors into account and send the bill to the school. Some teachers are quite a bit over 4.5%, others are under. It seems to have to do with annual payments for severance, overtime and possibly airfare and housing valuation, which seem to be 4.5% of a higher base, but I'm not sure what makes some lower - the adjustments seem relatively small, so I haven't taken time to research them. |
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big_fella1
Joined: 08 Dec 2005
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| Posted: Wed Feb 23, 2011 2:43 pm Post subject: |
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| interestedinhanguk wrote: |
| This was all legal and standard by the pension office (I spoke with a fluent English speaker at the office). |
Sorry I don't have the Presidential decree to back this up, but the NPS has stopped publishing them in English.
But in their Guide to the National Pension Scheme for foreigners they state:
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Payment Contributions
▶For workers in the workplace, the employees and their employers should make
contributions for the employees amounting to 4.5% of the standard monthly income
respectively, based on the employees� earned income.
▶The Individually Insured Persons should make contributions amounting to 9% of their
reported standard monthly income.
※ There is no discrimination in terms of the contribution rate between foreigners and
Koreans. The payment should be made no later than the 10th day of the following month |
Using 70% doesn't seem right, if it was legal your health insurance would also be calculated at 70%.
This is academic though as the NPS have decided they will accept 70% and will do nothing about it. |
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jinju necklace
Joined: 15 Jun 2009
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| Posted: Wed Feb 23, 2011 6:50 pm Post subject: |
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Nothing shady going on here at all.
Your pension contribution is based on your taxable income. The National Pension Service does their yearly audit every June, and they get your taxable income from the previous year from the National Tax Service (not your employer).
So, in June 2010 the NPS based your pension contribution on your 2009 taxable income - which was still 70% of your total income. You should be paying this pension amount from June 2010 until June 2011.
In June 2011, when the NPS does their next yearly audit, your pension contribution will increase because it will be based on your 2010 taxable income - which is now 100% of your total income.
Your school did nothing wrong. They are following the rules and regulations that they are supposed to. |
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