More than 1.5 million workers in South Korea have had pension contribution periods go uncredited because their employers deducted National Pension premiums from their wages but failed to pay them to the fund, data showed. Of those, about 130,000 would have met the minimum contribution period required to draw a monthly old-age pension had the unpaid months been counted.
Unpaid Premiums Block Credit for Time Worked
According to data obtained from the National Pension Service (NPS) by Rep. So Byung-hoon of the Democratic Party of Korea, a member of the National Assembly's Health and Welfare Committee, 1,503,427 subscribers had lost contribution credit at some point because their workplaces fell behind on premium payments, as of September this year. On average, each lost about seven months of credited contributions.
A National Pension old-age benefit is paid monthly only to those with at least 10 years of credited contributions. When an employer falls behind on premiums, however, the time an employee actually worked is not fully reflected in that record.
A total of 134,616 subscribers currently fall short of 120 months but would reach 10 years if their employers' unpaid months were added. Of those, 20,982 were aged 60 or older.
Of those, 56,883 are recorded at 119 months — one month short. Had their employers paid the overdue premiums, a single additional month of credit would have made them eligible for the monthly pension.
Some have already taken a lump-sum refund of their contributions instead of a monthly pension. Among those who received such refunds between 2023 and June this year, 2,823 would have reached the 10-year threshold if their employers' unpaid months had been included.
Employers Owe the Premiums, but Workers Bear the Loss
The problem is that while the legal duty to pay premiums rests with employers, the loss of contribution credit can fall on employees. National Pension premiums are split evenly between employer and worker. The company deducts the worker's share from wages, adds its own share and remits the total to the NPS.
If the employer does not pay, a worker who pays their own share directly may still receive credit for only part of the arrears period rather than all of it. In some cases, workers must also cover the employer's share to have the entire unpaid period credited.
The NPS said it recognizes that workers are being penalized by their workplaces' arrears. In a response to So's office, the service said it "fully sympathizes with the need to provide relief to workers who are disadvantaged even though their contributions were deducted from their wages because of the employer's nonpayment."
One proposal would credit unpaid periods to workers first. The NPS said such a step requires careful review, citing the burden on pension finances and fairness toward those who have paid in full. Measures currently under review include broadening the criteria for disclosing the identities of employers with large or habitual arrears.
So said it is "unreasonable that workers who have done nothing wrong should bear the risk of losing their retirement pension simply because an employer failed to pay premiums, when the legal obligation to pay rests with the employer."
He added that "a system that tells workers to pay again, even when it has been confirmed that premiums were deducted from their wages, cannot be left in place," and stressed that "the government should quickly put in place effective relief measures, including crediting workers' contribution periods first and holding delinquent employers accountable."
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