What is Lump-sum refund system?

An official at the NPS counsels foreign customer at a booth at Incheon International Airport in this file photo.

The National Pension Service’s (NPS) pension scheme covers not only Korean nationals but also foreigners residing here.

Thus, if a foreigner aged between 18 and 59 is working at a workplace covered by the scheme, he or she is required to pay into the national pension fund.

However, those from 22 countries whose pension systems do not mandatorily cover Korean citizens are excluded from the coverage. Also, some foreigners are excluded from coverage, namely those who are not registered according to the Immigration Act, those to whom a forced deportation order has been issued, and those who are staying in Korea illegally.

Those having D-1, D-2, D-3, D-4, D-6, F-1, F-3 or G-1 visas are excluded and some detached workers may be excluded if their home countries have concluded a Social Security Agreement with Korea.

Pensions are paid to those fulfilling eligibilities, regardless of their nationality. But for those who want to get their money and interest back at once in a lump-sum payment, there is a distinction between Koreans and foreigners.

Based on the principle of reciprocity, the NPS gives foreign workers a lump-sum payment if their home country gives Koreans the same treatment.

Where a foreigner’s home country has inked a social security agreement with Korea regarding the payment of the Lump-sum Refund, they can get the full amount paid at once.

The last precondition is the strongest. If one possesses E-8, E-9 or H-2 visas, the visa overrides their nationality or the two aforementioned conditions and they can receive a lump-sum refund. For example, Chinese people are not subject to the aforementioned conditions, but 3,032 Chinese have used the at-airport Lump-sum Refund service so far because they had at least one of the three visas.

Since 2010, the NPS allowed foreigners to receive their Lump-sum Refund at Incheon International Airport. For more information about the service, visit the NPS English website: https://english.nps.or.kr/jsppage/english/main.jsp.