Social Contribution Payroll

These are the 4 types of social contributions that the employee and employer are both responsible for:

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1. Medical Insurance

2. Long-term Medical Insurance

3. National Pension

4. Unemployment Insurance

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These are the additional 2 types of social contributions that the employee only is responsible for:

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1. Industrial Disaster Insurance

2. Retirement Fund

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Here is the breakdown in percentage of what the employer is responsible for in regards to the employees' salaries.

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1. Medical Insurance                              (3.545%)

2. Long-term Medical Insurance            (12.95% of the Medical Insurance amount)

3. National Pension                                (4.5% - Capped at KRW 265,500)

4. Unemployment Insurance                   (1.15%)

5. Industrial Disaster Insurance             (0.81%)

6. Retirement Fund                                 (8.33%)

 

 

*Retirement Fund Policy Overview:

 

In South Korea, a structured retirement fund policy is in place to ensure financial security for employees. Key aspects of this policy include:

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• Entitlement: Each employee is entitled to receive one month of retirement fund for every completed year of service with their employer.

• Eligibility: Employees become eligible for the retirement fund following the completion of their first year of employment.

• Pro-rated Calculation: Subsequently, the retirement fund calculation is pro-rated based on the duration of employment, ensuring fairness and accuracy.

• Disbursement: The retirement fund is disbursed to the employee upon the conclusion of their employment with the employer, serving as a valuable financial resource during transition periods.

• Escrow Management: To safeguard employee interests, the retirement fund is held in escrow by a trusted third party, typically a bank. A nominal administration fee, typically around 0.70%, may be levied by the bank for managing the escrow account, ensuring compliance and security.