"Taking a Cut from My Monthly Salary"... Companies Not Paying National Pension Contributions

Over 60,000 Businesses Delinquent This Year... No Notification Sent
"Fundamental Overhaul Needed for Flawed Systems Like Overpayments"

As the National Pension is expected to be depleted by 2055, there have been calls for a more fundamental measure to overhaul the lax government management system of the National Pension.

According to the "Status of National Pension Delinquent Workplaces" submitted by the National Health Insurance Service to Kim Min-seok, a member of the National Assembly’s Health and Welfare Committee from the Democratic Party of Korea, as of June 2023, there were a total of 61,587 workplaces delinquent in National Pension payments. Among these, 98% (60,564 workplaces) were small businesses with 10 or fewer employees.

To receive the National Pension, one must complete a payment period of 10 years, but the payment period is reduced by the duration the company fails to pay the National Pension. Therefore, the Health Insurance Service notifies workers of their workplace’s delinquency.

However, according to the status of workplaces notified of National Pension delinquency received by Assemblyman Kim, as of June this year, only 17% of the total workers were notified. Five out of six workers were unaware that their company had failed to pay their National Pension.

[Image source=Yonhap News]

Moreover, problems have been revealed in the management of National Pension overpayments. According to the recent status of National Pension overpayment occurrences and collections, there were 79,340 cases amounting to 64.482 billion KRW over the past four and a half years.

By year, there were 14,798 cases (11.723 billion KRW) in 2019, 20,501 cases (17.410 billion KRW) in 2022, and 10,854 cases (9.653 billion KRW) in the first six months of this year. The occurrence of overpayments by the Service has increased every year, and this year has already surpassed half of last year’s figures, with the final scale expected to be the largest in the past four to five years.

Among the overpayments made, 3,741 cases have not been recovered. Recently, 232 cases of overpayments are permanently unrecoverable because the National Pension has a three-year statute of limitations which has expired. There is also concern that 1.547 billion KRW (422 cases) of unrecovered overpayments from 2021 may reach the statute of limitations.

Assemblyman Kim stated, “Delinquency in workplaces can deepen the wealth gap among beneficiaries, and overpayments cause waste of the Service’s financial and administrative resources,” adding, “Although this issue has been pointed out several times in the National Assembly, the Service has neglected it.”

He continued, “If this situation continues to repeat, it could lead to a decline in public trust in the National Pension,” emphasizing, “It is necessary to guarantee workers’ benefit rights and implement more fundamental measures to manage delinquent workplaces and overpayments.”