New law blocking foreigners' deferred National Pension payments exempts existing payers; President Lee says on day of promulgation 'action needed on earlier payers'

SEOUL

The amended National Pension Act (Act No. 22096), which in principle bars foreign members from making deferred payments of National Pension contributions, was promulgated and took effect on the 20th, but foreigners who have already applied for deferred payment are not subject to the new provision. President Lee Jae Myung said at the 45th Cabinet meeting he presided over at Cheong Wa Dae the same day, "The law has been amended so that it can no longer be done going forward, but action is needed for those who made deferred payments before that." The people for whom the president mentioned action are those the addenda of the law promulgated that same day placed outside its scope. This is the first time the reciprocity attached to National Pension enrollment and lump-sum refunds has been extended to deferred payments. In the meantime, laws amended in 2016 and 2017 broadened the scope of deferred payments, and amendments to the deferred payment provision in 2020 and 2025 also did not include reciprocity for foreigners.

New law blocks only applicants after it takes effect and leaves existing deferred payers untouched

The amended law inserted a new Paragraph 6 into Article 126, which deals with special provisions for foreigners. The main text reads, "Article 92 shall not apply to foreign members." Article 92 is the provision on deferred payment of pension contributions. The proviso sets out two exceptions. Subparagraph 1 covers foreigners who meet both of two requirements. Item (a) is that "the law of the foreigner's home country provides that deferred payment of pension contributions corresponding to Article 92 can be made with respect to a pension corresponding to the National Pension under this Act," and item (b) is that "the provisions of the foreigner's home country law under item (a) apply to nationals of the Republic of Korea." It is a reciprocity requirement under which Korea allows deferred payments to nationals of countries that allow them to Koreans. Subparagraph 2 covers "foreigners prescribed by Presidential Decree in consideration of characteristics such as status of stay, period of residence in Korea and period of payment of pension contributions."

The timing of application was set by Paragraph 1 of Article 5 of the addenda. It reads, "The amended provisions of Article 126(6) shall apply beginning with foreign members who apply for deferred payment of deferred contributions after this Act enters into force." The new provision does not apply to foreigners who applied for deferred payment before the law took effect and had their periods of enrollment recognized.

The same law also tied the dependent family pension amount for foreign beneficiaries to reciprocity. The new Paragraph 2 of Article 126 provides that foreign beneficiaries "shall not be paid the dependent family pension amount under Article 52." The structure of exceptions is the same as in the deferred payment provision. If the law of a foreigner's home country pays an additional amount based on the number of dependents with pension benefits and that provision also applies to Korean beneficiaries, the foreigner can receive the dependent family pension amount, and foreigners prescribed by Presidential Decree are also exceptions. Article 4 of the addenda applies this provision beginning with old-age, disability and survivors' pension entitlements arising after the law takes effect, but also provides that if a person who acquired an entitlement before the law took effect becomes subject to the exclusion, a spouse, child or parent who newly meets the requirements after it takes effect is left out of the calculation of the dependent family pension amount. The dependent family pension provision blocked the addition of new dependents even for those with entitlements from before the law took effect, but the deferred payment provision applies only to applicants after it takes effect.

Under Article 1 of the addenda, the Presidential Decree exception provision (Article 126(6)2) takes effect six months after promulgation. Which statuses of stay and periods of residence will be exempted has been left to Presidential Decree. Paragraph 2 of Article 5 of the addenda allows foreigners who are subject to the exception and acquire an old-age pension entitlement during these six months to apply for deferred payment within three months of the date that provision takes effect. The same paragraph provides that, for this purpose, such a foreigner "may, notwithstanding Article 13(1), apply to the National Pension Service for enrollment and become a voluntary continued member."

President raises 'action for those who made deferred payments before that' the same day

According to a written briefing on the 20th by Cheong Wa Dae senior spokesperson Kang Yu-jung, three ministry reports were on the agenda that day: the results of the fifth Nuri rocket launch, statistics on fatal accidents subject to disaster investigation and support measures for administering the College Scholastic Ability Test for the 2027 academic year. The remarks on foreigners' deferred payments came after a discussion of National Pension contribution support for young people. Lee said, "It makes no sense that someone uses a workaround with pension resources I paid in to receive benefits beyond their contribution." He added, "I think it's fine to revise laws or guidelines if necessary." An article on the Cabinet meeting posted by Korea Policy Briefing the same day carried the same remarks.

The Ministry of Health and Welfare, the ministry in charge, reported to the Cabinet meeting on the 20th an agenda item requesting cooperation in publicizing pre-applications for the "Youth First-in-Life Contribution Support."

At the same meeting, Lee questioned whether, regarding the "Youth First-in-Life Contribution Support" plan under which the government will support the first National Pension contributions of young people aged 18 to 26 from next year, it was reasonable to expect only some to apply because giving benefits to everyone would impose too great a fiscal burden, and instructed officials to review raising the minimum enrollment age to an affordable age. Lee said young people's opposition seemed to stem from misunderstanding, and that there was also a large aspect of giving them the opportunity and right to extend their enrollment periods.

Government says it will prevent abuse through actual-residence checks and reciprocity

The government says it changed the screening criteria first, ahead of the law amendment. In a summary of material posted on Korea Policy Briefing on September 1, the Ministry of Health and Welfare announced, "To prevent abuse of the system, confirmation of foreigners' actual residence implemented from August 31 and strict screening." In a press reference material on September 1, the National Pension Service and the Ministry of Health and Welfare said, "From August 31, when foreigners apply for deferred payment of National Pension contributions (hereinafter 'deferred payment'), we will check whether they actually reside in Korea and strictly screen related documents." The two bodies said they were improving the system "as cases of foreigners receiving National Pension through deferred payment despite short enrollment periods have continuously been pointed out."

The changed criteria narrowed the period of residence required for deferred payment to "'actual period of residence in Korea,' not the period of foreigner registration and maintenance of status of stay." Foreign applicants must submit a certificate of facts concerning entry and departure, and the Service said it "will recognize as actual residence only months in which the period of residence in Korea is 15 days or more." Checks on whether overseas beneficiaries are alive, among other things, were increased from once a year to twice a year. In the same material, the two bodies said they "plan to swiftly pursue a revision of laws and regulations so that reciprocity, which had applied only to enrollment in the National Pension and payment of lump-sum refunds, will also apply to deferred payments," and the amended law was promulgated 49 days later, on October 20.

Minister of Health and Welfare Jeong Eun-kyeong said in the same material, "As the National Pension is a system to guarantee old-age income for nationals residing in Korea, we will make every effort to ensure that cases of abuse of the system, such as receiving a pension after residing in Korea only briefly, do not occur." National Pension Service Chairman Kim Sung-joo said, "We will further strengthen follow-up management of pension beneficiaries, such as expanding the exchange of death data between countries and shortening the period for entitlement verification checks." Actual-residence screening also applied only to applications from August 31 onward. Both the tightened screening and the law amendment targeted applications still to come.

Reciprocity was first attached to enrollment and lump-sum refunds; deferred payments are bound only now

Reciprocity has long existed in the National Pension Act. According to the reasons for enactment and amendment on the National Law Information Center, even before Act No. 8426, promulgated on May 11, 2007, the National Pension Act paid lump-sum refunds to foreigners "only where a foreign country has a National Pension lump-sum refund system and pays Korean workers benefits corresponding to the lump-sum refund." The reasons for amendment explained that an exception was being made only for foreign workers and others, "in consideration of the fact that the countries whose nationals pay into the National Pension but do not receive lump-sum refunds are mostly small and weak countries." Those subject to the exception were foreign workers under the "Act on the Employment of Foreign Workers" and foreigners with a status of stay permitting industrial training activities under Article 10 of the "Immigration Act." The latest amended law also left some of the reciprocity exceptions to a Presidential Decree that takes into account status of stay and other factors.

Reciprocity for lump-sum refunds was already described as an existing system in the reasons for the 2007 amendment, and the same principle was applied to deferred payments 19 years later. In the meantime, the deferred payment system moved first in the direction of expansion. Act No. 14214, promulgated on May 29, 2016, said in its reasons for amendment that it would "allow deferred payment of pension contributions also for periods in which non-income-earning spouses of public pension members were excluded from National Pension coverage" (effective November 30, 2016). Act No. 14921, promulgated on October 24, 2017, opened deferred payments for periods of exclusion after the first payment date to those who had returned lump-sum refunds as well (effective January 25, 2018).

Reciprocity for foreigners also left out of 2020 and 2025 deferred payment amendments

The side effects of deferred payments were already written into the reasons for a law amendment six years ago. The reason for amendment of Act No. 17774, promulgated on December 29, 2020, was "to limit the deferred payment period in order to prevent the problem of the National Pension deferred payment system being abused as a wealth-management tool by high-income earners." The reasons for amendment said the period limit would "enhance equity with diligent payers." The law "limited the deferred payment period of pension contributions to a range of less than 10 years" and took effect on June 30, 2021.

Act No. 21146, promulgated and taking effect on November 25, 2025, also amended the deferred payment provision. It changed the reference point for calculating the contribution rate for deferred payments from "the month in which the application date falls" to "the month in which the payment deadline falls." What the two sets of amendment reasons dealt with were the cap on the period and the reference point for the contribution rate. The Service and the ministry also said in their September 1 material that reciprocity had been "applied only to enrollment in the National Pension and payment of lump-sum refunds." Foreigners' deferred payments were bound by reciprocity 11 months after that, following the Service's announcement of tighter screening on the grounds that cases had "continuously been pointed out."

Work to overhaul the deferred payment system as a whole is still at the research stage. In an explanatory press release on September 3, the National Pension Service said, "A research service to improve the National Pension deferred payment system is currently under way, and the National Pension Service plans to review improvement measures together with the Ministry of Health and Welfare based on the results of the research service." On a plan to link actual contribution periods with periods eligible for deferred payment, it said, "As specific improvement measures have not been decided, please take care in reporting."

Constitution's provision on retroactive legislation stands in the way of action on foreigners who already made deferred payments

Regarding "action for those who made deferred payments before that" mentioned by the president, Article 13(2) of the Constitution provides, "No citizen shall be restricted in the exercise of political rights, or deprived of property rights by means of retroactive legislation." Paragraph 1 of Article 5 of the addenda of the law that took effect on the 20th applies the new provision to applicants "after this Act enters into force."

The National Pension Act has a provision, Article 57 (Recovery of Benefits), under which the Service recovers benefits received by fraudulent means.

The scale of those subject to action is not known. In the Cheong Wa Dae briefing on the 20th, the ministry and Service's press reference material on September 1 and the Service's explanatory press release on September 3, the government did not disclose the number of foreigners who gained eligibility for benefits through deferred payments, the pension amounts paid to them or their distribution by nationality. The basis cited in the September 1 material was the phrase "cases have continuously been pointed out."

Members' contribution rate rises every year from this year to reach 13% in 2033

The issue of foreigners' deferred payments arose in the first year of a pension reform that raises members' contributions in stages. According to material released on Korea Policy Briefing by the Ministry of Health and Welfare and the Ministry of Economy and Finance on March 20, 2025, the pension reform law raises the contribution rate from 9% to 13%. The material said, "It will be raised in stages by 0.5 percentage point every year from 2026, reaching 13% in 2033." The nominal income replacement rate was adjusted to 43% from 2026. The same material projected that whereas under fiscal projections before the reform "the fund was expected to be depleted in 2056," the depletion date would be extended by 15 years and the fund could be maintained until 2071.

The National Assembly Budget Office released a separate projection that reflected only the amended law, excluding the government's goal of raising fund returns. In its "Analysis of the Fiscal and Policy Effects of the 2025 National Pension Act Amendment" on June 9, 2025, the Budget Office projected that under the amended law, the fiscal balance would turn to deficit in 2048 and the fund would be depleted in 2065. Under the current system they would be 2041 and 2057, respectively, and under the amended law plus a 1-percentage-point rise in fund investment returns, 2055 and 2073. The Budget Office also presented "unfunded liabilities of 1,820 trillion won under the amended law." In a revised projection released on June 18 this year, reflecting improved fund management returns, it pushed back the shift to deficit to 2050 and fund depletion to 2069.

At the Cabinet meeting, Lee defined foreigners' deferred payments as a matter of "pension resources I paid in." Members' contribution rate will rise by 0.5 percentage point every year from 2026 to reach 13% in 2033. Over the same period, the pensions of foreigners who have already filled their enrollment periods through deferred payments will be paid regardless of the new law.

Scope of Presidential Decree exceptions and full overhaul of deferred payments remain unfinished business

With the amended law in force, three tasks remain. The first is the Presidential Decree that will set exceptions to reciprocity. Article 126(6)2 provides for exempted foreigners to be determined in consideration of status of stay, period of residence in Korea and payment period, and this provision takes effect on April 20, 2027, six months after promulgation. The range of foreigners actually barred from deferred payments depends on the reciprocity requirement in Subparagraph 1 and this Presidential Decree.

The second is identifying the countries that meet the reciprocity requirement in Subparagraph 1. The Service must examine whether a foreign applicant's home country law has a system corresponding to deferred payment under Korea's National Pension and whether that system also applies to Koreans. The third is the research service on a full overhaul of the deferred payment system that the Service said is under way. The Service said in its September 3 material that it would review improvement plans based on the research results.

The same law also contains provisions extending enrollment periods for Korean nationals. Article 18(1) removed the 12-month cap on military service periods added to enrollment periods, and Article 19(1) provides a childbirth credit of 15 months in addition to 12 months for the first child when there are two children. The "24 months" applied for three or more children was increased to "27 months." Both provisions take effect on January 1, 2027.

Sources (KST)

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• National Law Information Center · checked 2026-10-22 · 국민연금법 제·개정이유(법률 제8426호, 제14214호, 제14921호, 제17774호, 제21146호) · https://law.go.kr/LSW/lsRvsRsnListP.do?lsId=001781&chrClsCd=010102
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• National Pension Service, Ministry of Health and Welfare · 2026-09-01 · [보도참고자료] 외국인 국민연금 보험료 추후납부 요건 강화, 엄격 심사 추진 · https://nps.or.kr/pnsgdnc/nscvrgdata/getOHAE0002M1.do?hmpgBbsCd=BS20240145&hmpgCd=01&menuId=MN24000898&pageIndex=1&pstId=ZZ202600000000000991&searchGbu=&searchText=&sortSe=FR
• National Pension Service · 2026-09-03 · [보도설명자료] 국민연금 추납 전면 개편 검토, 내외국인 모두 손질한다 · https://nps.or.kr/pnsgdnc/nscvrgdata/getOHAE0002M1.do?hmpgBbsCd=BS20240145&hmpgCd=01&menuId=MN24000898&pageIndex=1&pstId=ZZ202600000000001005&searchGbu=&searchText=&sortSe=FR
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• Korea Policy Briefing (Ministry of Health and Welfare, Ministry of Economy and Finance) · 2025-03-20 · '연금개혁법안' 국회 통과, 내년 시행…"오랜 숙의 끝 이룬 성과" · https://www.korea.kr/news/policyNewsView.do?newsId=148940810
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• National Assembly Budget Office · 2026-06-18 · 기금운용실적 개선에 따른 국민연금 재정 수정전망 · https://www.nabo.go.kr/board/file/bulkDown.do?idx=9301&bid=68