Korean Job Discussion Forums

[War Eagle]

I was checking out the other thread about SS benefits when I realized I don't really know anything about Korean pension benefits (other than I can take a lump sum). If I plan on living in Korea for many years (undecided so far), is it better to take the lump-sum or get the Korean pension? What is the breaking point? It looks like early pension may be paid with as little as 10 years contribution, but full vesting comes at 20 years.

Also, this formula is confusing me Basic Pension Amount = 1.5(A+B) x (1+0.05N) . I don't understand. Why are A and B added together? Is this the amount that will be paid monthly after being fully vested?

Can anyone show me an example of how much I could expect to receive each month if I average, say 500 man won a month income with 25 years of contribution? 20 years? 15 years? 10 years? (I AM a math person, so please feel free to plug some numbers into the formula to help me understand).

Thanks for anyone who's willing to help.

[FriendlyDaegu]

The goal of the system is that an average person will get a pension payment equal to half their salary after 40 years of work. The system is also redistributive, so high wage earners will get less and vice versa.

To get there they need to take into account both the average salary for all workers and the salary of the pensioner (A and B).

As you said, vesting is at 20 years, so the 1 + 0.05N is to calculate a lesser payment between 20 and 40 years, N being the number of years over 20.

Let's say the average salary for workers in Korea is 2mil won. If you also make 2mil won and work for 40 years, your BPA will come out to 12mil (1.5 X 4mil X 2). That's a yearly benefit, so your monthly benefit will be 1 mil. This is half your working salary and fulfills the goal of the system.

If you work for 20 years it will come out to 25%.

The goal in the future is to reduce BPA from 50% of yearly salary after 40 years to 40%, so the 1.5 multiplier is being reduced by a small amount every year until they get to that amount.

Edit:
NPS sends out a "Guide to your Coverage Record of National Pension" every year to the address they have on file for you. If they know you're a foreigner, it will be in English. On the one I got last year, it says what my monthly pension amount is, how much I have in the system, and what my expected retirement date is and how much the benefit will be. If you're not getting these, you should check with NPS to make sure you're in the system with the correct address. That's the best way to know what you'll be getting if you leave your money in the system.

[War Eagle]

Makes perfect sense now. They should have gotten you to write out the guide in English Thanks!