Korea-China pension deal goes into effect

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Korea-China pension deal goes into effect

Asia Times Online, May 22, 2003

SEOUL - An agreement on the exemption of pension fees between South Korea and China is to become effective on Friday, the Korean Ministry of Health and Welfare said on Thursday.

Under the pact, Chinese migrant workers in South Korea, excluding job trainees, are exempt from national fund premiums, while South Korean residents in China will not pay old-age-pension premiums, according to officials.

In February, the two sides finalized a memorandum of understanding on the exemption of pension fees for nationals residing in each other's country.

In South Korea, workers from overseas have been obliged to pay such premiums since 1995. The Chinese government will collect the premiums going back to 1999 retroactively from foreign workers.

An estimated 20,000 South Koreans residing in China are expected to be exempt from China's pension system, under which all employees should pay 28 percent of their monthly salary as an insurance premium. The total amount of money exempt from the pension scheme will reach 40 billion won (nearly US$33.5 million) per annum, according to ministry officials.

So far, an estimated 2,000 Chinese migrant workers in South Korea reportedly have paid 2 billion won (about $1.7 million) in premiums for the national pension system, they noted.