Republic of Korea Agreement and foreign pension information 106-04028000

The Korean National Pension Scheme commenced on 1st 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:

Ministry of Health and Welfare - 보건복지부

For Australia:

Services Australia

For Republic of Korea:

National Pension Service - 국민연금

For Australia:

Centrelink International Services (CIS)

Note: the Australian Taxation Office (ATO) is responsible for anything relating to double coverage. See Double coverage.

For Republic of Korea:

See Competent institutions

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 more 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.

Australia/Republic of Korea Agreement on Social Security - Liaison Form (AUS187KR)

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

The following forms are completed by Republic of Korea or the customer and are returned to Centrelink International Services (CIS).

연 락 서 식 - LIAISON FORM (KOR/AUS3)

• 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

Disability pensions are not covered by the Agreement.

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

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

See Double coverage/certificates of coverage information in International Social Security Agreements.

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, see the Taxation information in International Social Security Agreements.

Tax treaty

Australia has a double tax agreement with Republic of Korea. Pensions are only taxable in country in which the person is resident. Any tax deductions from one country may be used as a credit against any tax payable in the other country.

Tax deductions

Korean pensions do not have tax deducted.

Korean tax year

Republic of Korea uses the calendar year (1 Jan – 31 Dec) as the tax year.

Any queries about:

• health insurance coverage in the other country – the customer should be directed to contact the health insurance authority in the other country, and
• Medicare coverage - should be directed to Medicare, see Medicare Consumers Program Support - Medicare Consumers Section - Medicare Branch

For general information on health insurance and Medicare coverage, see Health Insurance/Medicare information in International Social Security Agreements.

Australia does not have a reciprocal health agreement with Republic of Korea.

Korean pensions do not have health insurance deductions.

The gross rate of Korean pension (before deductions) is maintained.

The official language of Korea is Korean.

Korean naming conventions 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]

REP. OF KOREA [country]

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]

REP. OF KOREA [country]

Rural address

Title. Surname, First Name [addressee]

6 Jong-ro, Changnyeong-eup, Changnyeong-gun [number + street + sub-prv2 + sub-prv]

GYEONGSANGNAM-DO 50329 [province + postcode]

REP. OF KOREA [country]

Post Office Box address

Title. Surname, First Name [addressee]

P.O. Box 00 [P.O. Box]

51 Oncheon-ro, Yuseong-gu [premises + street + sub-prv]

DAEJEON 34186 [province + postcode]

REP. OF KOREA [country]

Address elements/Korean suffixes:

• province do, si
• sub-province (sub-prv) gun, si, gu
• sub-province 2 (sub-prv 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 August 1 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

Note: additional child amounts, also known as Overseas Child Component and Additional Child Payment, are included in the proportional rate calculation.

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

Forms to claim an Australian payment in Republic of Korea can be obtained by contacting the Korean authorities or Centrelink International Services (CIS). Forms can also be downloaded from the Services Australia website. See the Resources page for a link.

Forms required

For all payments:

• AUS140KR - Australian pension claim - Agreement with Korea
• Mod(iA)KR - Income and assets - Korean

Forms can be lodged at any Korean social security office.

Under the Administrative Arrangements, the Korean liaison agency will verify the customer’s identity and send the claim to CIS with a completed liaison form including periods of coverage in Republic of Korea and Korean pension details. See Exchange of information and liaison forms in the Social security agreement between Australia and Korea table.

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.

Australian claims under the Korean Agreement may be lodged in some other Australian social security agreement countries.

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

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

See the Claim lodgement matrix table.

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

See Claims for Australian payments under International Agreements and Start Day for coding assistance.

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)

Notes:

• Overlapping periods are only counted once (Article 16.3)
• Policy advice is that 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
• Periods of coverage that have been refunded to the customers cannot be used for totalisation

Korean periods of coverage means a period of contributions under the legislation of Korea and any other period taken into account under that legislation for establishing an entitlement to benefits or for calculating the amount of benefits.

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 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 with Republic of Korea (Article 17.1) refers to the overall rate calculation contained in the Social Security (International Agreements) Act 1999 (S12(1)).

This means:

• customers paid under the Agreement who are outside Australia are paid a proportional rate according to their Australian working life residence (WLR)
• the Rate Limiter/Limited Rate applies, and
• additional child amounts are included in the proportional rate. These amounts are paid automatically as a component of the Australian pension if the customer is qualified (S14A SS(IA)A 1999)

The proportional rate also includes the proportionalisation of the Korean pension (Randisi concession) for use in the income test (Article 17.1). The rate of foreign pension used in the income test is the customer’s Australian WLR divided by 300. The Agreement determines the Randisi proportion (300 months). This is different to the legislation that is used to determine the proportional rate (420 months in most cases).

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).

Although a person may be qualified for an Australian payment or portable outside Australia, if the customer has no WLR the rate of payment outside Australia will be nil.

Note: in some circumstances their partner’s WLR may be used. See Working Life Residence (WLR).

When a person is paid a proportional rate under an agreement, Rent Assistance (RA) cannot be paid. Other add-ons such as Energy Supplement and Pension Supplement are payable under normal add-ons portability rules. See Portability of Add-ons.

Examples of when a customer is paid a proportional rate includes (but not limited to):

• permanently overseas
• temporarily overseas longer than 26 weeks for Age Pension
• former resident transferring to the Agreement for portability

Returns to Australia

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

If there is no change to the country of residence, any movement is considered temporary and a review is set to automatically change the rate after a continuous period of 26 weeks. If a delegate determines that a person has changed their country of residence, coding the Country of Residence (CRES) screen will automatically apply the correct rate calculation.

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). That is, all Korean payments covered by the Agreement, including social welfare payments, are not assessed as income but will be deducted dollar-for-dollar from the maximum rate of the Australian payment before the application of the income or assets test.

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).

The Agreement with Korea specifies the rate calculation that applies ‘where an Australian pension is payable whether by virtue of this Agreement or otherwise to a person who is outside Australia’ (Article 17.1). See Outside Australia in Rate calculation.

Note: ‘or otherwise’ refers to autonomous customers.

Payments exempt under the Agreement are generally exempt for autonomous customers (section 8(8)(zc) Social Security Act 1991).

See Assessment and exempt payments in the Rules for Korean payments table.

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

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 in receipt of an autonomous payment covered by the Agreement may be able to transfer to the Agreement if they are in Republic of Korea when their normal portability period expires. The portability under the Agreement then applies, see Portability.

Note: the customer must meet the transfer requirements.

Once a customer transfers to the Agreement, they are then considered to be paid by virtue of the Agreement and all provisions of the Agreement apply, including rate of payment. See Rate calculation.

See Transfers to international social security agreements.

Transfers to autonomous

A person who has sufficient Australian qualifying residence (or an exemption) can only transfer from the Agreement to autonomous 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.

Customers who transfer to autonomous may be affected by the former resident provisions if they leave Australia again within 2 years of becoming an Australian resident. See Former resident provisions.

For Australian payments made into bank accounts outside Australia. See Overseas Bank Account Details (OBAD).

• 노령연금 - Old Age Pension (AGE)

Notes:

• Consists of the Basic Pension (기본연금액) and Dependents’ Pension (부양가족연금)
• Divided Pension (분할연금) is a category of Old Age Pension that applies to divorcees
• Government officials, military personnel, private school teachers and some postal workers are not covered by the National Pension Act
• The Agreement allows Australian citizens to take lump sum refunds of contributions (일시금) in the same way as Korean nationals

The requirement to claim Korean pensions applies to Korean AGE.

Notes:

• Customers who have received a lump sum refund of Korean contributions cannot receive a Korean pension
• If a person is older than Korean pension age, see Eligibility criteria for Old Age Pension table and their partner receives 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 and policy advice is that there is no requirement to pursue a claim. See Claim forms and processes in the Rules for Australian payments under the Agreement table

Contributions paid by employers on behalf of employees. Includes periods for child-rearing and military service.

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

Claim packs available: AGE.

Claim packs for Korean payments can be issued through the Foreign Pension System (FPS).

Note: customers who wish to voluntarily claim Korean INV or SUR must be directed to the Korean liaison agency, see Authorities, institutions and liaison agencies in the Social security agreement between Australia and Korea table.

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

Where 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.

Return of foreign pension claim

Under the Administrative Arrangements, Republic of Korea forms can be lodged in Australia at any service centre.

• 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 via internal mail to International Services (CIS). See Processing a foreign pension claim

Centrelink International Services (CIS) only

CIS will complete the following and attach to the foreign pension claim to send to the agreement country. See Agreement Liaison Detail (ALD) for method of transmission.

All claims:

Australia/Republic of Korea Agreement on Social Security Liaison Form (AUS187KR).

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

Note: under the Agreement with Korea, periods of employment or self-employment in Australia during periods of working life residence (WLR) must be confirmed (Article 13.1(b)). The AUS027KR is used. It is sent with the foreign pension claim.

Enquiries about claims for Korean payments in Republic of Korea or a third country should be directed to the Korean social security authorities. See Authorities, institutions and liaison agencies in the Social security agreement between Australia and Korea table.

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, see Authorities, institutions and liaison agencies in the Social security agreement between Australia and Korea table.

Customers receive 12 regular monthly payments each year. There are no bonus payments. Coded as Freq: 'MTH'.

Payments are made in AU dollars. However, foreign income must be recorded in source currency – Korean Won (KRW). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the Foreign Pension Details (FPD) screen must not be changed to the AU dollar amount.

Korean payments are generally increased for cost of living (CPI) in April each year.

For more information on bulk exchanges of information with other countries, see International Data Exchange Program and auto-indexation of foreign pensions.

Korean AGE is:

• proportionalised according to the customer’s working life residence (WLR) before being included in the income test where the Australian rate is proportional, including Agreement and autonomous customers (Article 17.1), and
• ordinary income in Australia for autonomous customers and direct deduction if paid under the Agreement (Article 17.4)

Each member of a couple is deemed to receive half of the total amount received by the couple (Article 17.6).

Note: the 26 week temporary departure and return provisions apply (Article 17.3 and 17.5).

Lump sums may be a refund of contributions or payout of a small pension.

Assessable lump sums are treated as ordinary income over 12 months from date of receipt (s1073 Social Security Act 1991). See Treatment of lump sums.

Note: if there is no ongoing pension on Foreign Pension Details (FPD) screen, the Foreign Claim Detail (FGD) screen must be updated to 'FIN-NOM'

See also Other known payments.

Amounts that are treated as a direct deduction under an agreement are exempt from the income test (section 8(8)(zc) Social Security Act 1991).

Note: payments that are exempt from the income test are included in a direct deduction rate, for example, under an agreement rate calculation or for Special Benefit.

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

The eligibility and coding tab contains detailed information on the coding of Korean payments covered by the Agreement.

Lump sums may be a refund of contributions or payout of a small pension. They are assessable as ordinary income over 12 months from date of receipt (s1073 Social Security Act 1991). See Treatment of lump sums.

They are coded on the Foreign Income Details (FID) screen as Type: 'LMP'. See Treatment of lump sums.

Note: if the customer has a claim in progress on Foreign Claim Summary (FGS) screen, but is not granted a foreign pension, FGD screen must be updated to 'FIN-NOM' when lump sum FID coding is completed.

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 lump sum arrears.

Note: 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.

Payments are made in Australian (AU) dollars. However, foreign income must be recorded in source currency – Korean Won (KRW). Official statements provide the foreign currency amounts.

Note: amounts recorded in source currency on the Foreign Pension Details (FPD) screen must not be changed to the AU dollar amount.

Assessment: Ordinary income

Coding:

On the Foreign Pension Details (FPD) screen, coded as Type: 'INV' in the Basic Amount field.

Assessment: Ordinary income

Coding:

On the Foreign Pension Details (FPD) screen, coded as Type: 'SUR' in the Basic Amount field.

For assistance with coding:

• other generic benefits paid by the Korean Government (including by funds not covered by the Agreement), see Foreign pension coding
• any other income received from Republic of Korea, see Foreign income and assets
• assessable lump sums (contributions refund for example) on the Foreign Income Details (FID) screen as Type: 'LMP'. See Treatment of lump sums

Note: if the customer has a claim in progress as FGS, but is not granted a foreign pension, the Foreign Claim Detail (FGD) screen must be updated to 'FIN-NOM' when lump sum FID coding is completed.