South Korea Benefits Guides

Retirement

The National Pension System (NPS) is a mandatory pension scheme in South Korea. Both employers and employees contribute to the pension fund during the employee's working years.

The contributions are calculated based on a percentage of the employee's income, subject to a monthly cap. The contribution rate is 9% of the employee's income, with 4.5% contributed by the employer and 4.5% deducted from the employee's salary.

Retirement is very important in South Korea, and many will have private savings accounts & plans (IRA), but it is not typical for an employer to contribute to an additional retirement savings account.

Healthcare / Private Medical Insurance

Universal healthcare is strong in South Korea; in 2015, the country ranked first in the OECD for healthcare access, and public satisfaction is consistently among the highest in the world.

Private medical insurance, also known as supplementary or supplemental health insurance, is provided by private insurance companies and complements the coverage provided by the national health insurance system in South Korea.

Private insurance will not reduce the cost of medical procedures, but it will subsidize the typically 20-50% out of pocket payment that is required when residents only use the NHI.

Some employers may fully cover the cost of private medical insurance for their employees, while others may provide it as an optional benefit that employees can choose to participate in and contribute towards the premium.

Typically, private health includes coverage for chronic illnesses such as as cancer which may not be covered by the NHI.

Some popular insurance providers include:

1. Samsung Life Insurance (includes medical)
2. Hanwha Life Insurance
3. Kyobo Life Insurance
4. Dongbu Insurance
5. LINA Insurance (formerly known as Cigna Insurance Korea)

Life Insurance & Disability

In SK, employers may offer group life insurance, but it’s not entirely common for them to contribute to the premium.

Group life insurance coverage provided by employers is often a basic level of coverage, and employees may have the option to purchase additional coverage or riders at their own expense.

The coverage is typically tied to the individual's employment with the company, and the policy may cease or require conversion to an individual policy if the employee leaves the organization. Rather than being based on salary, payout will be based on coverage the employee chose.

Plan payouts can vary from 3x annual pay to

Leading providers in South Korea include:

• Samsung Life
• Hanwha Life
• Fubon Hyundai Life
• NongHyup Life
• Kyobo Life

Employment Insurance

Employment insurance is compulsory in South Korea and employers and employees share the cost, contributing a rate based on the employees’s monthly pay. This provides coverage for various situations, including unemployment, occupational injury or illness, childbirth, and unpaid wages due to employer bankruptcy or closure.

Private employment insurance policies in South Korea are also available and offer extended unemployment benefits, supplemental income protection, coverage for specific types of illnesses or injuries, and additional support for specific circumstances or events. These policies are typically offered by private insurance companies and can be purchased by individuals or provided as an employee benefit by employers.

Other tax advantaged benefits

Childcare Subsidies are available to families, ranging in amounts of KRW 100,000 - 200,000 per child per month, depending on the childs’ age. See the details for amounts and elligibility here.

The Education Expenses Reduction is a subsidy that applies to specific education-related expenses, such as tuition fees for qualified institutions. It can cover expenses from preschool to higher education levels.

Annual Leave

In the first year of working, an employee is entitled to 1 day off leave per month, or 11 days for the year. After 1 year of service, employees are entitled to 15 days of annual paid leave each year. Paid leave days are then calculated by adding one day every 2 years, not to exceed 25 days. Like many countries, South Korea also has several public holidays that they celebrate.

Maternity & Paternity

South Korea requires employees to be provided with 90 days maternity leave, 45 of which must be taken after childbirth. The first 60 days are paid for by the company, and the remainder are paid by the government.

In the case of twins, the childbearer is entitled to 120 days.

The paternity leave entitlement in South Korea is 10 days of paid leave. Of these 10 days, 5 days are paid by the company with the other 5 being covered by Employment Insurance.

The specific funding mechanism for periods of maternity leave depends on the size of the business, either the employer or Employment Insurance pays for maternity leave. There is no requirement for the portion of wages paid to the employee, but Employment Insurance grants those on maternity leave to 40% of their usual monthly pay.

Other Policies

Work related illness or injury: In a work-related illness or injury, the employer must provide paid time off until the employee recovers. Employers are obliged to subscirbe to accident compensation insurance, which covers all payments associated with work-related illness & injury.

Protections: An employer cannot dismiss an employee during, or within 30 days following, maternity leave or any period of leave for medical treatment for an industrial injury or disease.

Dismissals: Except in special cases, South Korean employers are required to give a notice period of at least 30 days before terminating an employment agreement. Alternatively, employers can offer payment in lieu of notice.