If Employees Pay Overdue National Pension First, Company Will Reimburse Later

National Pension Service CI (Photo by National Pension Service)

[Asia Economy Reporter Lee Chun-hee] A system will be implemented that recognizes the entire period as a subscription period if an employee pays the national pension contributions on behalf of the company when the company defaults on the contributions, which are equally shared between the company and the employee. The amount paid will be reimbursed to the worker with a certain interest after being collected from the company later.

The Ministry of Health and Welfare announced on the 23rd that the partial amendment ordinance of the "National Pension Act Enforcement Decree," which includes these details, was approved at the Cabinet meeting that morning. This enforcement decree was prepared to stipulate delegated matters following the enforcement of the revised "National Pension Act" starting from the 9th of next month and to improve and supplement operational deficiencies.

Under the revised law, workers can individually pay the amounts defaulted by the employer to the National Health Insurance Corporation. Currently, only employee contributions can be paid individually, and the payment deadline is limited to within 10 years. Also, even if paid, only half of the default period is recognized as the subscription period. However, going forward, individual payment will be possible for employer contributions as well, and the payment deadline restriction will be removed. However, additional interest will apply to amounts overdue by more than 10 years. The subscription period will also be recognized for the entire default period.

Therefore, the amendment includes provisions regarding additional interest. The lowest interest rate of 0.7%?currently used between 0.7% (1-year fixed deposit interest rate) and 1.2% (national tax refund additional interest rate)?will be applied to strengthen workers' pension rights. If the defaulted insurance premiums are later paid or collected from the employer, the National Health Insurance Corporation will refund the worker with an additional 1.2% interest based on the national tax refund additional interest rate.

Additionally, the amendment includes separate provisions limiting the deduction cap on pension adjustment differences for beneficiaries. Previously, it was half of the pension amount regardless of income, but now, if there is no income, it cannot exceed one-fifth. Regarding the certification criteria for dependent family pensions, proof documents such as marriage and adoption certificates have been added alongside family relation certificates. Furthermore, related contents have been revised following the elevation of the legal basis for establishing the National Pension Fund Management Expert Committee to a law.

Jung Ho-won, Director of the Pension Policy Bureau at the Ministry of Health and Welfare, said, “This improvement in the individual payment system for workers’ defaulted insurance premiums is expected to strengthen workers’ pension rights and contribute to stable old-age income security through improvements in the adjustment method for pensioners without income.”