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Korean Job Discussion Forums
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julia_w
Joined: 09 Jun 2011
Location: Minneaoplis, MN
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 Posted: Thu Mar 22, 2012 6:29 pm Post subject: No pension on an E-2 Visa? |
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Hey everyone,
Ok, I am SO confused. I've been offered a contract with a school, but there is no pension. My recruiter said that I would be working on an E-2 visa. From perusing the forums here, it's clear to me that I would be hired as a contractor rather than an employee.
So, firstly, the f*ck is a pension anyway? And why do I need one if I will only be teaching for a year?
Secondly, I thought that it was required by law to have a pension for E-2 visa holders? Since the school won't be setting up the pension for me, does that mean I have to pay into some sort of national program anyway?
Gah! Help!
Thanks!
J |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Thu Mar 22, 2012 7:19 pm Post subject: |
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Pension is a 4.5% deduction from your wage. Your employer matches it. You can get a cash refund of the full 9% when you leave Korea.
Being enrolled in pension is linked to health insurance. If your employer doesnt enroll you in one, then you can't have the other. It's both or nothing.
If your employer scams you by making you an independent contractor, they pay nothing. You then become responisble to pay the entire 9% to pension, your entire health insurance contribution (about 7%) AND your tax withholding is automatically raised from about 1.9% (depending on your salary) to a flat 3.3%.
Your employer is also not responsible under the independent contractor scam to assist you with any setting up or payments to the pension, tax, or health offices. It is YOUR responsibility.
The only sane advice you will receive is:
Flatly turn down this job and tell your recruiter that you are not interested and will not consider any jobs he has to offer that do not include BOTH pension and health insurance. Let him know you are wise to the contractor scam and it isn't going to fly with you. Then prepare to find a reputable recruiter because he likely going to drop you.
(If it is going to be your first time in Korea, you can obtain tax exempt status for your first two years with a form submission so tax isnt really a concern you)
Last edited by OculisOrbis on Thu Mar 22, 2012 7:21 pm; edited 1 time in total |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Thu Mar 22, 2012 7:20 pm Post subject: Re: No pension on an E-2 Visa? |
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| julia_w wrote: |
Hey everyone,
Ok, I am SO confused. I've been offered a contract with a school, but there is no pension. My recruiter said that I would be working on an E-2 visa. From perusing the forums here, it's clear to me that I would be hired as a contractor rather than an employee.
So, firstly, the f*ck is a pension anyway? And why do I need one if I will only be teaching for a year?
Secondly, I thought that it was required by law to have a pension for E-2 visa holders? Since the school won't be setting up the pension for me, does that mean I have to pay into some sort of national program anyway?
Gah! Help!
Thanks!
J |
A pension is required by law for all teachers here (excepting South Africans). Pension is 9% of monthly salary (usually). Essentially (for most E-2's) they deduct 4.5% of your salary every month and the employer is supposed to provide a matching 4.5%. If you are Canadian, American or Australian you get the whole thing back in a lump sum when you leave.
Now here's where things get sticky and unclear. Some schools will attempt to hire you as an "Independent Contractor". You are STILL required to pay pension and medical insurance though...but the whole 9 % for pension and the whole of medical insurance comes out of YOUR pocket and not the employer's. Hence the incentive to cheat you.
Now Immigration states and has stated in the past that an E-2 CAN NOT be an "Independent Contractor".
HOWEVER the tax office does and has allowed it and since Pension does not fall under Immigration's jurisdiction...their hands are tied in this regard.
BUT...it is only legal IF the contract is clearly written that you are an IC AND it is set up legally. Many contracts fail in this regard...it's not enough just to say "You are an Independent Contractor" and then go on to treat you like a regular employee.
So you will still have to pay pension but you will pay the whole thing as opposed to half. I wouldn't work at this school...doesn't sound like a good deal for you. |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Thu Mar 22, 2012 7:24 pm Post subject: |
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| OculisOrbis wrote: |
Pension is a 4.5% deduction from your wage. Your employer matches it. You can get a cash refund of the full 9% when you leave Korea.
Being enrolled in pension is linked to health insurance. If your employer doesnt enroll you in one, then you can't have the other. It's both or nothing.
If your employer scams you by making you an independent contractor, they pay nothing. You then become responisble to pay the entire 9% to pension, your entire health insurance contribution (about 7%) AND your tax withholding is automatically raised from about 1.9% (depending on your salary) to a flat 3.3%.
Your employer is also not responsible under the independent contractor scam to assist you with any setting up or payments to the pension, tax, or health offices. It is YOUR responsibility.
The only sane advice you will receive is:
Flatly turn down this job and tell your recruiter that you are not interested and will not consider any jobs he has to offer that do not include BOTH pension and health insurance. Let him know you are wise to the contractor scam and it isn't going to fly with you. Then prepare to find a reputable recruiter because he likely going to drop you.
(If it is going to be your first time in Korea, you can obtain tax exempt status for your first two years with a form submission so tax isnt really a concern you) |
Heh you posted while I was writing my reply...didn't see you'd answered it. |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Thu Mar 22, 2012 9:31 pm Post subject: |
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| OculisOrbis wrote: |
| (If it is going to be your first time in Korea, you can obtain tax exempt status for your first two years with a form submission so tax isnt really a concern you) |
This does NOT apply unless she is hired by a public school or university.
Hagwan workers PAY TAX from day 1.
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Skippy
Joined: 18 Jan 2003
Location: Daejeon
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| Posted: Fri Mar 23, 2012 4:48 am Post subject: Re: No pension on an E-2 Visa? |
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| julia_w wrote: |
So, firstly, the f*ck is a pension anyway? And why do I need one if I will only be teaching for a year?
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Simple question do you like money? Do you want more money. If yes then pension is good. If you do not want more money then refuse pension. But if you refuse pension, legally you are still required to pay it. Using the above IC trick schools you can end up having to pay ALL yourself thus less money.
Bonus question are you invulnerable? Can you be shot or burned and not hurt at all. Then refuse pension and the attached health insurance. But if you are susceptible to fire and taxis hitting you then make sure you get pension and health. |
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wylies99
Joined: 13 May 2006
Location: I'm one cool cat!
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| Posted: Sat Mar 24, 2012 6:18 pm Post subject: |
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| OP, if you are an American you will profit from the pension because you can cash it out when you leave Korea. You will get your contributions AND the school's contributions. Besides, if you let them slide on following the law with the pension they will cheat you elsewhere. Insist that the school follows Korean pension and health insurance laws. Otherwise, find a job somewhere else. Oh, and any recruiter who pushes a school that ignores pension law is not a trustworthy recruiter. Find another recruiter. |
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JustinC
Joined: 10 Mar 2012
Location: We Are The World!
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| Posted: Sat Mar 24, 2012 7:12 pm Post subject: |
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| This doesn't sound like a good school; more likely a Hagwon which doesn't play by the rules. Walk away. |
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YTMND
Joined: 16 Jan 2012
Location: You're the man now dog!!
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| Posted: Sat Mar 24, 2012 7:36 pm Post subject: |
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| wylies99 wrote: |
| OP, if you are an American you will profit from the pension because you can cash it out when you leave Korea. You will get your contributions AND the school's contributions. Besides, if you let them slide on following the law with the pension they will cheat you elsewhere. Insist that the school follows Korean pension and health insurance laws. Otherwise, find a job somewhere else. Oh, and any recruiter who pushes a school that ignores pension law is not a trustworthy recruiter. Find another recruiter. |
2.2 salary yields 99,000 (4.5%) X 12 months = 1,188,000 more at the end of the year where you have to collect twice as much 2,376,000 (your share and the school's).
2.3 salary without pension = 1,200,000 more at the end of the year (compared to the 2.2 salary) where you don't have to collect anything at the end of the year because you are essentially getting about 200,000 more per month.
You don't profit from pension necessarily. The total of everything has to be looked at. Do the math, happy hagwon shopping folks  |
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Wildbore
Joined: 17 Jun 2009
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| Posted: Sat Mar 24, 2012 9:02 pm Post subject: |
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| YTMND wrote: |
| wylies99 wrote: |
| OP, if you are an American you will profit from the pension because you can cash it out when you leave Korea. You will get your contributions AND the school's contributions. Besides, if you let them slide on following the law with the pension they will cheat you elsewhere. Insist that the school follows Korean pension and health insurance laws. Otherwise, find a job somewhere else. Oh, and any recruiter who pushes a school that ignores pension law is not a trustworthy recruiter. Find another recruiter. |
2.2 salary yields 99,000 (4.5%) X 12 months = 1,188,000 more at the end of the year where you have to collect twice as much 2,376,000 (your share and the school's).
2.3 salary without pension = 1,200,000 more at the end of the year (compared to the 2.2 salary) where you don't have to collect anything at the end of the year because you are essentially getting about 200,000 more per month.
You don't profit from pension necessarily. The total of everything has to be looked at. Do the math, happy hagwon shopping folks |
You also forget about the health insurance. If they aren't providing pension, you also probably have no health insurance, or some crap private insurance which you pay for but does nothing. Also, if you get hit by a bus, you will be grateful.
Also, as someone else stated, if they aren't providing the government pension and insurance, you are required to pay 100% of the contributions yourself. Could get very expensive for you if your ever audited. |
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YTMND
Joined: 16 Jan 2012
Location: You're the man now dog!!
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| Posted: Sat Mar 24, 2012 9:19 pm Post subject: |
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| You also forget about the health insurance. |
The issue was pension, not health insurance. I would much rather get my own health insurance with 200,000 extra to work with each month.
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| if they aren't providing the government pension and insurance, you are required to pay 100% of the contributions yourself. Could get very expensive for you if your ever audited. |
Not true. If they are an employer and you are seen as an employee (not independent contractor), they are required to pay 50%. This would add to the 2.3 salary with 1,200,000 with another 1,035,000. That's 2,235,000 more. If my calculations are correct, then you would be getting an extra 1,047,000 than if you went the 2.2 route.
If you want to just give your money away, then by all means do so. The rich don't stay rich because they follow base rules. They use the law to their advantage, holding on to whatever money they can.
I do not know of a law that penalizes both the employer and employee. Tax issues would likely pose a bigger problem. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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