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Foreigners exploit pension loophole, with ethnic Koreans leading claims
🇰🇷 South Korea /Economy & Trade

Foreigners exploit pension loophole, with ethnic Koreans leading claims

From Dong-A Ilbo · () Korean

Translated from Korean and summarized by DistantNews. Read the original for the full story.

At a glance

News Named sources Context piece
  • President Lee Jae-myung highlighted a loophole allowing short-term foreign residents to claim old-age pensions via retroactive payments, a system he deems contradictory.
  • Applications for retroactive pension payments by foreigners have surged, with 994 filed in the first half of 2024, an increase from previous years.
  • Ethnic Koreans (Joseonjok) represent the largest group among foreign applicants, accounting for nearly 80% of claims in the first half of the year.

President Lee Jae-myung has criticized a perceived loophole in South Korea's National Pension system that allows foreigners who have resided in the country for short periods to claim old-age pensions through retroactive payment schemes. Lee described the situation as a "contradiction," urging a swift review of eligibility requirements.

Data reveals a significant increase in retroactive pension payment applications by foreigners. According to information provided to the National Assembly's Health and Welfare Committee by the National Pension Service, applications rose from 530 in 2023 to 848 in 2024, and are projected to reach 1,517 in 2025. The first half of 2024 alone saw 994 applications, indicating a continuing upward trend.

To qualify for an old-age pension, individuals typically need to have contributed for at least 10 years (120 months). The retroactive payment system allows contributors to make up for missed payments, potentially enabling individuals with very short contribution periods, even just one month, to become eligible for pensions.

It is a contradiction that foreigners who have resided in the country for a short period are eligible for National Pension retroactive payments.

— Lee Jae-myungPresident Lee Jae-myung's statement on the pension system loophole.

Among foreign applicants, ethnic Koreans, referred to as Joseonjok, constitute the vast majority. Of the 994 applications filed in the first half of 2024, 792 (79.7%) were from this group. Chinese nationals followed at 6.4%, then Americans at 4.7%, Japanese at 3.0%, and Canadians at 2.9%.

Concerns are mounting that this system is being exploited for "pension investment" rather than serving its intended purpose of supporting long-term residents. Lawmakers are calling for a comprehensive overhaul of the regulations governing foreign pension claims to prevent the misuse of the system and protect national retirement funds.

We cannot allow a well-intentioned system created to resolve blind spots for our citizens to be used as a means of 'pension investment' by foreigners.

— Kim Gyo-heungLawmaker Kim Gyo-heung's comment on the exploitation of the pension system.
About this summary

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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