Korean Job Discussion Forums

[Missihippi]

Sorry if kind of long, but i have a bit of a problem here and i'm hoping for any genuine help/advice.

I'm an American on a E-2 Visa on my 3rd year at a public elementary school.
After recieving a letter from the NPS(national pension service) about how much i've contributed thus far, i did some small calculations (9% of my salary x months worked) and realized it wasn't quite as high as it should be. I'll post my numbers below:

Year 1 projected
2,000,000 salary x 12 months = 24,000,000
pension (employee) @ 4.5% = 1,080,000
pension (employer) @ 4.5% = 1,080,000
total (9% as stated in contract) = 2,160,000

Year 2 projected
2,100,000 salary x 12 months = 25,200,000
pension (employee) @ 4.5% = 1,134,000
pension (employer) @ 4.5% = 1,134,000
total (9% as stated in contract) = 2,268,000

Because my letter from pension only calculated for 21 months, i projected that to compare:

21 month projected: 3,861,000
21 month actual: 3,586,640
difference: 274,360

Now, in the grand scheme of things, 274,360 isn't that much.. but it's my money! and i want to be paid correctly as stated in my contract. When i confronted administration with my problem they contacted NPS (allegedly) and they said they will correct the mistake but cannot retroactively pay me. After further inspection (logging on to the NPS website), it appears as though on year 2, my salary was only reported at 1.4 million/month (roughly 70% of my actuall salary). When i asked admin about this, they stated that for fiscal year 2010 (july - july) the government granted foreigners special discount for taxes (30 %). Sound complicated? yeah to me too.

Ok, so after reading this website:
http://www.korea4expats.com/article-income-taxes.html
I've determined that there is some legitimacy to this "discount" thing.. but at the same time, it has nothing to do with my pension contribution.

My theory is that the school reported my salary lower in order to get that tax discount, but it affected my pension as well. Americans don't pay year 2 taxes anyway, so i'm not sure what they were thinking.

Well, on to year 3: Now that i have to pay taxes, and my school is reporting my correct income. How much will it be? according to this site: http://www.nts.go.kr/eng/help/help_52.asp?top_code=H001&sub_code=HS05&ssub_code=HSE2 It's only 1.5%. But if you look at that first website i posted it says closer to 6%. What gives?

Thank you for those that take the time to read through this.. sorry it's so long.

[OculisOrbis]

up until jan 1, 2010, employers could pay into to pension and health based on only 70% of your salary. the (incorrect) rational for it was that foreigners had the option of choosing a 30% income reduction for tax purposes or a 15% flat rate. employers jumped on this and used it as an excuse to reduce their payments into pension and health - and the tax and pension offices let them. For the past year, and currently, tax, health and pension must now be calculated on 100% of your salary (and housing allowance if you receive that).

also, the first website you posted about tax info is just plain wrong. use the government tax website for the correct info. your tax withholding should be about 1.5% as the tax withholding calculator reveals.

[Missihippi]

[OculisOrbis]

if the previous explanation is why you have less in your pension account than you think you are supposed to have, then there is nothing you can do as your employer did nothing wrong (according to the tax and pension offices)