Social Security Agreement for Americans
Introduction
Foreigners who are aged between 18 and 60 and who are residing and working in Korea, regardless of their nationality, should be covered under the NPS. Foreigners whose countries do not cover Korean nationals, however, are excluded from the coverage of NPS.
Despite the above provisions, if there are relevant provisions under the Social Security Agreement(SSA) between Korea and any foreign countries, those provisions will be applied.
A bilateral SSA is concluded to coordinate the social security program of one country with a comparable program of the other country with the aim of addressing unfavorable conditions to the nationals of the two countries in the application of their social security programs.
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The U.S.
◯SSA between Korea and the USA entered into force on Apr. 2001.
◯Exemption from Dual Coverage
①In general, an employee is subject to the legislation of a contracting country in which he/she is employed.
②A self-employed person is subject to the legislation of a contracting country in which the person resides.
③In the case where a person is considered to be self-employed under the laws of a contracting country but considered to be employed under the laws of the other contracting country for the same activity, that person is subject to the laws of the contracting country where he/she resides.
④A detached worker is exempt from coverage under the laws of the contracting country which he/she is sent to for less than 5 years if he/she is covered under the laws of his/her home country. This 5-year limit can be extended to 8 years with the proper consent between agencies of the both country.
◯Benefits under this Agreement
Even though your periods of coverage in one country are not sufficient to qualify for pension benefits, you may be eligible for benefits after this agreement has entered into force. This is possible due to the totalization of coverage in both countries.
①Korean National Pension Benefits under the SSA
If you are insured for more than 18 months in Korea but do not have enough coverage time (e.g., 20 years for Full Old-age Pension) to qualify for pension benefits under the Korean pension system, you may be able to qualify for Korean benefits by totalizing periods of coverage under the Korean pension system and the American pension system. However, those periods creditable under the American pension system must not coincide with the periods under the legislation of Korea. Your benefit is calculated by dividing the Korean periods of coverage by the total periods of coverage and then multiplying by the Theoretical Benefit. The Theoretical Benefit is calculated based on the totalized periods in both countries.
②American Pension Benefits under the SSA
If you have been insured for more than 18 months in the USA but do not have enough covered time (e.g., 10 years for Full Old-age Pension) to qualify for pension benefits under the American pension system, you may be able to qualify for American benefits by totalizing periods of coverage under the Korean pension system and the American pension system. However, those periods creditable under the Korean pension scheme must not coincide with the periods under the American legislation.
The American agency shall compute a pro rata Primary Insurance Amount in accordance with American laws based on (a) the person’s average earnings credited exclusively under American laws and (b) the ratio of the duration of the person’s periods of coverage completed under American laws to the duration of a coverage lifetime as determined in accordance with American laws. Benefits payable under American laws shall be based on the pro rata Primary Insurance Amount.
③A person who is or has been subject to the laws of one contracting country and who resides within the territory of the other contracting country shall, together with his dependents, receive equal treatment with the nationals of the other contracting country in the application of the laws of the other contracting country.
④A Korean Lump-sum refund is paid to the USA nationals. However, whether a Lump-sum refund is paid to a national of a third country depends on the reciprocity principle stipulated in the Korean National Pension Act.
⑤Since there is no provision for a Lump-sum refund in the legislation of the American Pension System, Korean people cannot be paid a Lump-sum refund from the American Pension System. The contributions to the American Pension System may be calculated toward pension payments according to the legislation of the American Pension System instead.