Travel Reference
In-Depth Information
Pensions
Most foreign nationals working in South Korea are automatically enrolled in the mandatory
national pension system, which is overseen by the National Pension Service (NPS). The
contribution rate to an employee's pension is currently set at 9 percent of monthly salary,
split evenly between employee and employer, up to a maximum 3,750,000 won. Pension
payments should be deducted automatically during each pay cycle, and the NPS usually
sends the employee an annual statement showing the balance of their pension account.
When the worker can enjoy these pension spoils depends on where that worker is from.
Nationals of South Africa, Singapore, and a handful of other countries can opt out of paying
into the pension system altogether, since their respective governments allow South Koreans
to do the same. Nationals of a few other countries, including Canada, Australia, and the Un-
ited States, are eligible to claim their total pension payments as a lump-sum refund when
they cease working and depart South Korea, again because their governments afford South
Koreans similar privileges. Anyone else, including Brits, will have to wait until they're 60,
when (if they're still in South Korea) the government will start returning their contributions
in the form of regular old-age pension payments.
The standard “buyer beware” rules apply, but there's no doubt the South Korean economy
holds a lot of promise for investors. It has had the odd rocky year, but overall the trend
seems to be consistent strong growth. Some domestic firms are already global industry lead-
ers, and others are steadily becoming more competitive. South Korean stocks tend to trade
at a discount to Asian peers (in no small part due to the threat, however remote, of conflict
with North Korea) and are seen by many regional analysts as relatively undervalued. Com-
pared to places like China, South Korea's equities, bond, and foreign exchange markets are
also liquid and well-regulated.
Bear in mind however that South Korea is still an emerging market (just), and as the
rewards are often greater, so are the risks. Ignorance about the machinations of the South
Korean business and legal environment, and the export-dependent country's inherent vul-
nerability to global financial storms, means nasty surprises are always a possibility. By all
means, seize the opportunity, but don't get carried away.
