Republic of Korea Agreement and foreign pension information 106-04028000

The Korean National Pension Scheme commenced on 1 January 1988.

In Republic of Korea, national legislation requires the compulsory payment of social security contributions. The national pension system covers residents, most workers and the self-employed.

Contributions insure individuals against disability and death and provides for income in the form of a pension once the person reaches retirement age.

The legislation is the responsibility of the Korean government, but administration and payment of pensions is the responsibility of the central pension service.

Social welfare legislation provides benefits for those with low incomes, generally managed by regional governments.

The Agreement with Republic of Korea started one 1 October 2008. There are no previous versions.

For Australia:

Department of Social Services (DSS)

For Republic of Korea:

보건복지부 - Ministry of Health and Welfare

For Australia:

Services Australia

Note: the Australian Taxation Office (ATO) is responsible for double coverage provisions.

For Republic of Korea:

국민연금 - National Pension Service

For Australia:

Centrelink International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for double coverage provisions.

For Republic of Korea:

국민연금 - National Pension Service

Under the Agreement with Republic of Korea, information held about customers may be exchanged between the liaison agencies to determine entitlement to payments under the Agreement (Article 19.1).

For information on bulk data exchange, see International Data Exchange Program and auto-indexation of foreign pensions.

The following liaison form is completed by Centrelink International Services (CIS) and sent to Republic of Korea.

• AUS187KR - Australia/Republic of Korea Agreement on Social Security

For help with creating and completing the liaison form, see: Agreement liaisons, NZ CICs and exchange of information.

The following liaison form is completed by Republic of Korea and sent to Centrelink International Services (CIS).

연 락 서 식 - LIAISON FORM (KOR/AUS3)

This liaison form is used in all communication from the Republic of Korea.

• Part A - Information about the contributor: provides information about the insured person
• Part B - Information about the applicant: provides information about the applicant (if not the insured person)
• Part C - Information provided by Korea: details information provided by Republic of Korea, including periods of coverage and Korean pensions
• Part D - Information required from Australia: details information requested by Republic of Korea
• Part E - Signature: certification by Korean liaison agency

Invalidity/Disability pensions are not covered by the Agreement.

The Agreement with Republic of Korea includes double coverage provisions. Certificates of coverage are used to confirm exceptions.

Any enquiries about double coverage or certificates of coverage should be directed to the Australian Taxation Office (ATO) website.

Any queries about taxation of pensions or the requirement to lodge a tax return should be directed to:

• in the other country - the tax authority in the other country directly
• in Australia - the Australian Taxation Office (ATO) website

For general information on taxation, including issuing Australian payment summaries.

Tax treaty

Australia has a double tax agreement with Republic of Korea, which avoids the need for the customer to pay tax in both countries.

A person who is 'resident' in one country (according to the definition in the tax agreement) generally only pays tax on pensions in that country.

Tax deductions from income by one country may be allowed as a credit against tax payable in the other country

Tax deduction

Korean pensions do not have tax deductions.

The gross rate of Korean pension, before any deduction, is maintained.

Korean tax year

Republic of Korea uses the calendar year (1 January - 31 December) as the tax year.

Australia does not have a Reciprocal Health Care Agreement (RHCA) with Republic of Korea.

Any queries about:

• Health insurance coverage in the other country - tell the customer to contact the health insurance authority in the other country, and
• Medicare coverage - direct them to Medicare

Korean pensions do not have health insurance deductions.

The official language of Korea is Korean.

See Korean naming convention and pronunciation.

Telephone country code is +82.

Street address

Title. Surname First Name [Addressee]

24 Songnim-ro, Dong-gu [Number + street + sub-province]

INCHEON 22554 [Province + postcode]

REPUBLIC OF KOREA

Street address with apartment/unit/flat

Title. Surname First Name [Addressee]

101-dong - 103-ho [101-103] [Building number + door/apartment]

2275 Dalgubeol-daero, Suseong-gu [Number + street, sub-province]

DAEGU 42007 [Province + postcode]

REPUBLIC OF KOREA

Rural address

Title. Surname First Name [Addressee]

6 Jong-ro, Changnyeong-eup, Changnyeong-gun [Number + street + sub-province 2 + sub-province]

GYEONGSANGNAM-DO 50329 [Province + postcode]

REPUBLIC OF KOREA

Post Office Box address

Title. Surname First Name [Addressee]

P.O. Box 00 [P.O. Box + number]

51 Oncheon-ro, Yuseong-gu [Premises + street + sub-province]

DAEJEON 34186 [Province + postcode]

REPUBLIC OF KOREA

Korean suffixes used in addresses:

• Province: do, si
• Sub-province: gun, si, gu
• Sub-province 2: eup, myeon
• Floor: cheung
• Building number: dong
• Apartment: ho
• Street: ro, gil, daero

When an address is located underground the 'ho' number will be prefixed with the letter ‘B’ for basement (sometimes the word ‘Jiha’ is used instead of ‘B').

The Korean postal code system changed from a 6-digit postal code system to a 5-digit postal code system on 1 August 2015.

Marriage or other forms of legal partnership are not available to same-sex partners in Republic of Korea.

For Australia, the Agreement with Republic of Korea (Article 2.1) covers:

• Age Pension

Claims for Australian payments under International Agreements use the same methods and processes as domestic claims.

Forms to claim an Australian payment in Republic of Korea can be obtained by:

• downloading the relevant form from the Services Australia website. See Resources
• contacting Centrelink International Services (CIS)
• contacting the Korean authorities

Australian forms needed

The customer is to complete and provide the following:

• AUS140KR - Australian Pension Claim – Social Security Agreement between Australia and Korea
• Mod(iA)KR - Income and Assets - Korea

Forms can be lodged at any Korean social security office.

Under Section 4 of the Administrative Arrangements, the Korean liaison agency will:

• accept all forms/documents and date stamp the AUS140 form
• verify the customer’s identity and personal details, and
• send the form(s) and any supporting documentation to Services Australia with a liaison form specifying periods of coverage in Korea and information regarding Korean pensions

See Exchange of information and liaison forms.

If a person is not an Australian resident and in Australia on the date the claim is made, they may use the Agreement to meet the residence rules for claims if, on that date, they are:

• an Australian resident, a resident of Republic of Korea or another Agreement country that accepts claims for Australia under other agreement (Article 15(a)), and
• physically present in Australia, Republic of Korea or that third country (Article 15(b))

Note: although a customer may be able to claim a payment while resident or present in a third country, they cannot be paid unless the Agreement also allows them to be portable. For example, the Agreement with Korea allows the same as normal portability so, as Disability Support Pension (DSP) is only portable for limited temporary absences, a person who is not resident in Korea is not portable. This means the DSP claim would be rejected.

Claims under the Korean Agreement

Claims for Australian payment under the Korean Agreement may be lodged in certain other Australian Agreement countries.

See the Claim lodgement matrix.

Accepting other Agreement claims

Republic of Korea will accept claims for Australian benefits under other Australian social security Agreements.

Claim lodgement consideration

The customer must also satisfy any other rules under the other agreement and other social security law provisions.

The normal rules for working out the date a claim is 'made' and the start day apply to claims under the Agreement with Republic of Korea. However, the Agreement also allows:

• the date of lodgement of a claim for an Australian payment in Republic of Korea to be used as the date of lodgement in Australia (Article 23.2), and
• the date of lodgement of a claim for Korean Old Age Pension as the date of lodgement of a claim for Australian Age Pension (FP claim = AU claim) (Article 23.3) if:
• the person meets the qualifying age criteria for payment and either:
  - the customer requests, or
  - provides information on periods of residence in Australia at the time of claiming the Korean payment

For coding help, see:

• Claims for Australian payments under International Agreements and
• Start Day

The Agreement allows:

• totalisation of periods of qualifying Australian residence and periods of coverage in Republic of Korea to meet any minimum periods to qualify for an Australian pension, for example, 10 years for Age Pension (Article 16.1)
• the total of any non-continuous periods of coverage in Republic of Korea to be considered to be continuous to meet any continuous residence requirement to qualify for an Australian pension (Article 16.2)

Note:

• Overlapping Australian residence and Korean periods of coverage are only counted once (Article 16.3)
• Adjoining periods of Australian qualifying residence and Korean periods of coverage, with a break of up to 3 months in between, can also be considered to be continuous (Policy)
• Periods of coverage that have been refunded to the customers cannot be used for totalisation

See Resources in International Social Security Agreements for examples of totalisation..

Korean period of coverage:

• means a period of contributions, for example, a period during which contributions were paid, or any equivalent period, as defined in the Korean legislation
• where equivalent periods may include deemed periods such as for studying, child rearing or military service
• where both actual and deemed periods may be used when totalising for Australian qualification purposes, as long as they are certified, and don’t overlap
• must be certified by the Korean Competent Institution

To be able to use the totalisation provisions, a person who is not an Australian resident at the date of lodgement must have at least 12 months Australian Working Life Residence (WLR) in Australia of which 6 months must be continuous (Article 16.4(a)).

Note: unlike WLR for rate, this period cannot be rounded.

No minimum WLR is required if the person is an Australian resident at the date of lodgement (Article 16.4(b)).

The Agreement does not allow the ongoing residence requirement for DSP if the customer continues to reside in Korea.

For customers outside Australia, the Agreement with Republic of Korea (Article 17.1) refers to the overall rate calculation contained in section 12(1) of the Social Security (International Agreements) Act 1999 (S12(1)).

This means customers paid under the Korean Agreement have:

• a proportional rate paid according to their Australian Working Life Residence (WLR)
• the Rate Limiter/Limited Rate applied, and
• additional child amounts (S14A SS(IA)A 1999) included, if eligible
• their Korean pension proportionalised (Randisi concession) for use in the income test using denominator of 300 (Article 17.1)

Note:

• In some circumstances their partner’s WLR may be used. See Working Life Residence (WLR)
• Autonomous customers who are paid a proportional rate and in receipt of a Korean pension will have the Randisi concession applied to their Korean pension (Article 17.2).

Non-proportional rate extension

Customers paid under the Agreement and temporarily outside Australia, cannot have their non-proportional portability rate extended if they are unable to return to Australia.

Returns to Australia

The proportional rate continues to apply for the first 26 weeks of a temporary return to Australia (Article 17.3).

• For returns to Australia before 9 June 2018, manually code the Temporary Return to Aust Ind on the Residence Savings (RSS) screen

Customers in Australia under the Agreement are paid a direct deduction rate (Article 17.4).

The Agreement does not include a comparison rate in Australia.

Departures from Australia

The inside Australia rate continues to be paid for the first 26 weeks of a temporary departure from Australia (Article 17.5).

Under the Agreement, provided the customer remains qualified, Australian Age Pension is payable indefinitely in Republic of Korea (Article 5.1).

Third country portability under the Agreement

Portability to third countries for a customer paid under the Agreement is the same as for an autonomous Age Pension customer leaving Australia (Article 5.2). See Portability of payments.

If necessary, a customer who receives an autonomous payment that stops being payable due to portability reasons can transfer to the Agreement to continue payment if:

• the payment is covered by the Agreement
• the customer meets any payment limitations, such as severely disabled, and
• the customer is able to meet the lodgement provisions of the Agreement

If transferred to the Agreement, all Agreement rules apply to the customer, including portability and rate of payment.

See Transfers to international social security agreements.

A person who has sufficient Australian qualifying residence (or an exemption) can transfer from the Agreement to autonomous only if they are an Australian resident and in Australia.

On return to Australia, system processing will automatically transfer to from the Agreement to autonomous if the person is an Australian resident who has only used the Agreement to extend their portability while outside Australia.

Former resident provisions may affect customers who transfer to autonomous if they leave Australia again within 2 years of becoming an Australian resident.

Australian payments may be issued to customers outside of Australia. If the customer intends to be outside of Australia:

• long-term (12 months or longer), their Australian payment may be issued to an overseas bank account. See Overseas Bank Account Details (OBAD) for payment requirements by country
• for less than 12 months, payment will generally continue to their normal Australian bank account every 2 weeks

See Delivery of payments to Centrelink customers outside Australia.

For Republic of Korea, the Agreement covers the National Pension Act for particular payments.

Government officials, military personnel, private school teachers and some postal workers are not covered by the National Pension Act.

Main payments

• 노령연금 - Old Age Pension (AGE)
• 기본연금액 - Basic Pension
• 부양가족연금 - Dependents’ Pension
• 분할연금 – Divided Pension (DIV)

The following known payments are paid by the Korean authorities but are not covered under the Agreement:

• 장애연금 (Disability pension)
• 유족연금 (Survivor pension)
• 일시금 (Lump sum refunds of contributions)

For help with:

• Assessment of Korean pensions, see Assessment
• Coding of Korean pensions, see Eligibility and Coding

Customers who have received a lump sum refund of Korean contributions cannot receive a Korean pension.

The requirement to claim Korean pensions applies to Korean AGE.

Note:

• Customers may voluntarily claim Korean INV or SUR
• Customers must contact the Korean liaison agency directly to enquire about claiming these payments
• If a person is older than Korean pension age, (see Eligibility criteria for Old Age Pension table) and their partner receives a Dependent’s pension on their behalf as a component of the Age Pension, the person is exempt from CFP
• The Foreign Claim Detail (FGD) screen should be set to FIN-NOM
• See Assisting customers to claim a foreign pension
• Although Korean disability and survivor pensions may be payable, they are not covered by the Agreement. Policy advice is that there is no requirement to pursue a claim. See Claim forms and processes

See Foreign pension claims.

Eligibility and coding of foreign pension tab contains detailed information on Korean payments that are subject to CFP legislation.

Claim pack is available for AGE.

Claim packs are issued through the Foreign Pension System (FPS). See Assisting customers to claim a foreign pension.

Specific requirements for Korean claims

The customer is to complete and provide the following:

All claims:

• 대한민국과 호주 간 사회보장협정에 의한 한국급여청구서 - APPLICATION FOR KOREAN BENEFITS UNDER AGREEMENT ON SOCIAL SECURITY BETWEEN THE REPUBLIC OF KOREA AND AUSTRALIA (KOR/AUS2)
• Documents to prove residence in Korea, for example, resident registration card
• Proof of dependence, for example, family register

Requests for additional information

If information provided with the claim for Republic of Korea pension is incomplete, Republic of Korea will send requests for information in Korean direct to customers.

Employment periods

Under the Agreement with Republic of Korea (Article 13.1(b)), periods of employment or self-employment in Australia during periods of working life residence (WLR) must be confirmed. See Working Life Residence (WLR).

The Verification of working life residence and periods of employment in Australia (AUS027KR) form is included in the foreign pension claim pack for the customer to provide employment details.

Receipt of foreign pension claim by Services Australia

Under the Administrative Arrangements, Republic of Korea forms can be lodged in Australia at any service centre. See Processing a foreign pension claim.

• All foreign pension claims and supporting documentation must be scanned, and
• The original foreign claim form and copies of supporting documentation must be sent in paper form to Centrelink International Services (CIS). See Processing a foreign pension claim

Centrelink International Services (CIS) only:

CIS will complete the following or arrange for the following to be completed as necessary and attach the documents to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

CIS staff are required to sign the relevant section in the claim form.

All claims:

• AUS187KR - Australia/Republic of Korea Agreement on Social Security

For help with creating and completing the liaison form, see Agreement liaisons, NZ CICs and exchange of information.

Enquiries about claims for Korean payments in Republic of Korea or a third country should be directed to the Korean social security authorities..

Korean payments may be paid by direct deposit in Australia.

Any queries about the non-payment of Korean pension should be directed to the Korean pension authorities.

Agreement pensions are paid as 12 regular monthly payments each year. There are no bonus payments.

Other benefits or private pensions are normally paid monthly or annually.

Korean pensions must be recorded in the source currency – Korean Won (KRW). Official statements provide the foreign currency amounts.

Amounts recorded in source currency on the Foreign Pensions Details (FPD) screen must not be changed to the Australian dollar amount.

Note: payments into Australia are made in Australian dollars.

Korean payments are increased for Consumer Price Index (CPI or cost of living) changes annually in April.

For more information on bulk data exchanges and auto adjusted CPI increases, see International Data Exchange Program and auto-indexation of foreign pensions.

• directly deducted (Article 17.4) and ignored in the income test (Section 8(8)(zc) Social Security Act 1991) for customers paid under the Korean Agreement who are in Australia
• proportionalised and assessed as ordinary income (Article 17.1) for customers paid:
• under the Korean Agreement who are outside Australia
• autonomously who are on a long-term outside Australia rate
• ordinary income (not proportionalised) for customers paid:
• autonomously who are inside Australia
• under another agreement other than Republic of Korea or New Zealand who are inside or outside Australia

See Rate Calculation for when a direct deduction or proportional rate is applied.

Note:

• Divided Pension (DIV) (분할연금) is a category of Old Age Pension that applies to divorcees
• Additional Pension Amount is a supplement that may be paid with any National Pension Service pension
• It is paid with the main pension and assessed the same as the main agreement pension
• Each member of a couple is deemed to receive half of the total amount received by the couple (Article 17.6)

• 장애–금 - Disability pension (INV)

May be granted to a person who participates or had participated in the Korean National Pension Plan.

• 유족–금 - Survivor pension (SUR)

May be granted to an eligible person where the deceased contributor had participated in the Korean National Pension Plan.

• Assessable lump sums

Republic of Korea may pay lump sums being for a refund of contributions (일시금) or payout of a small pension.

The Agreement allows Australian citizens to take lump sum refunds of contributions in the same way as Korean nationals.

Foreign non-remunerative lump sums are assessed as ordinary income for 12 months from date of receipt (s1073 Social Security Act 1991).

Where a customer is granted a lump sum payment in lieu of an on-going pension payment: If the customer has a claim in progress on the FGS screen, FGD screen must be updated to FIN-NOM when FID coding is completed.

There are no exempt payments under the Agreement with Republic of Korea.

The Agreement does not include embargo provisions.

Arrears debts for customers and their partners are raised under s1228A Social Security Act 1991 and recovered via normal methods under the Act. See Comparable Foreign Payment (CFP) lump sum arrears debts.

Where an arrears period is not provided, the end date can be assumed to be the end of the month prior to the date of the notice.

A contravention debt may also occur if the customer does not advise of the grant of their Korean payment within their notification period. See Foreign pension coding.

Life certificates are not used by Republic of Korea.

Customers in Australia are sent notices at grant but do not receive regular notices.