Korea's national pension and the lump-sum refund

If you work for a Korean employer, a slice of every paycheck goes into the National Pension. The good news for Americans: you can usually get it back as a lump sum when you leave for good.

The short version

Foreign residents aged 18 to 59 are generally covered by Korea's National Pension Scheme (NPS), the local version of Social Security [1].
The contribution rate went up in 2026 for the first time in decades. It rises half a percentage point a year from 2026 until it reaches 13%, split between you and your employer [3][4].
The US and Korea have a social security (totalization) agreement, and the US is on the NPS list of countries whose citizens can claim a lump-sum refund when they leave Korea [1][2].
You can apply at an NPS office within a month of your departure, or pick up the cash at Incheon Airport. You have five years from becoming entitled to claim [1].
If your US employer sends you to Korea, the agreement may keep you on US Social Security instead, with a certificate of coverage [2].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (USD 1 = KRW 1,333.99) [6].

How the National Pension works for Americans

The NPS covers residents aged 18 up to 60, foreigners included. Workers at a covered workplace pay through payroll, much like FICA back home, and foreign residents who aren't on a workplace plan may be covered as individuals [1]. Some groups are excluded, such as international students, trainees who aren't employed after their training, and diplomats [1].

The 2026 rate increase

Korea's National Assembly passed its first major pension reform in 18 years on March 20, 2025, and the key changes took effect January 1, 2026 [3][4]:

What changed	Before	From 2026
Total contribution rate	9% of monthly income	Rising 0.5 points a year toward 13% [3][4]
Who pays	Split evenly between employer and employee	Still split evenly [3]
Income replacement target	41.5% in 2025	43% from 2026 [3]

Starting from 9%, a half-point increase puts the 2026 rate at 9.5%, or 4.75% each for you and your employer. On a monthly salary of KRW 3,000,000 (about USD 2,250), your half would come to about KRW 142,500 (about USD 107). Contributions are calculated on a capped income base, so very high earners pay less than the full percentage of their pay. Check your payslip for the actual figure.

Think of it this way: on a 9.5% rate, you're stashing a little under 5% of your pay with the NPS, plus your employer's match. For a teacher on a two-year contract, the refund can be a nice chunk of change.

What the US-Korea agreement does

The United States and Korea signed a social security agreement, often called a totalization agreement. It does three practical things for Americans [2]:

Prevents double taxation for people sent over by a US employer. If a US company transfers you to Korea for a limited period, you can stay on US Social Security and skip the NPS. Your employer requests a certificate of coverage, and the self-employed attach a copy to their US tax return each year [2].
Lets credits from both countries count together if you don't have enough in either one for a pension. On the US side you need at least six US credits (about a year and a half of work) for Korean coverage to count. On the Korean side you need at least 18 months of Korean coverage [2].
Opens the door to the refund. The NPS pays lump-sum refunds to foreigners when Korea and their home country have an agreement that covers refunds, when their country offers Korean citizens an equivalent benefit, or when they worked on certain visas. The US appears on the NPS list of countries paid under a social security agreement [1].

According to the SSA's summary of the agreement, a worker with less than 10 years of Korean coverage can receive a refund at age 60, on losing Korean nationality, or on permanently emigrating from Korea [2]. That last one is the trigger for most Americans: you leave and don't plan to come back as a resident.

Refund or keep it?

Most Americans who work in Korea for a few years take the refund. It's simple, it's cash, and it includes interest calculated at the three-year fixed deposit rate [1].

But if you've been in Korea a long time, or you might combine Korean and US credits under the agreement, run the numbers before you cash out. Once you take the refund, that Korean coverage is gone. A US expat tax preparer or a financial planner who knows both systems can check your situation.

On the US side, there's some good news for anyone who'll draw a foreign pension. The Social Security Fairness Act, signed January 5, 2025, repealed the Windfall Elimination Provision and the Government Pension Offset for benefits payable after December 2023. The WEP used to cut US benefits for some people with foreign pensions [5].

How to claim the lump-sum refund

You have several ways to apply. Pick based on when you leave and where you want the money.

Option 1: At an NPS office before you leave

Apply at a local NPS branch or counseling center within one month of your departure. Bring [1]:

the application form
your passport and Residence Card (ARC)
your plane ticket
a copy of your bankbook or other proof of the account where you want the money

You'll get a certificate of application acceptance. The money then goes to the account you named, either a Korean account or an overseas account by remittance [1].

Option 2: Cash at Incheon Airport

If you're flying out of Incheon within a month of applying, you can choose to collect the refund at the airport [1]. The fine print:

Your former employer must report your resignation to the NPS by the day before you fly.
File the application in advance and pick the airport payment method. Give a backup bank account too.
On departure day, everyone goes to the NPS Incheon Airport Center in Terminal 1 (open 9 a.m. to 6 p.m.), even if you're flying from Terminal 2.
Exchange your payment slip at a Woori Bank counter before immigration. Amounts of USD 10,000 or more go to the basement branch.
Pick up the cash, in foreign currency, at the Woori Bank booth in the duty-free area after immigration [1].

Airport payment isn't available on weekends, public holidays or the last business day of December, and the refund is paid in one of 16 foreign currencies, not Korean won [1]. Book a weekday flight if you want this option.

Option 3: From the US, after you've left

Already back in the States? You can apply by mail with the application form, your passport, proof of your bank account and an overseas remittance application. Documents you prepare in the US need an apostille, and anything not in Korean needs a Korean translation and notarization [1]. You can also apply through an agent in Korea with a power of attorney you've signed [1].

Deadlines

Rule	Deadline
Claiming the refund	Within five years of becoming entitled [1]
Refiling a lapsed claim	Within 10 years after reaching age 60 [1]
Applying at an NPS office before departure	Within one month of leaving [1]

Five years sounds like a long time, but apostilles and translations from the other side of the Pacific are a hassle you can skip. Do it before you go.

Don't mix it up with severance pay

The NPS refund is a separate thing from the severance pay (toejikgeum) that Korean employers owe workers who leave after at least a year on the job. Your employer pays severance, while the NPS pays the pension refund, and they come with separate paperwork. If you're on a teaching contract, check both.

What about US taxes?

Uncle Sam taxes US citizens on worldwide income, and a pension refund is income of some kind. How it's treated depends on your situation and on the US-Korea tax treaty. A US expat tax preparer can check your case. And if the refund sits in a Korean account, it counts toward your FBAR and Form 8938 balances like any other foreign money.

Leaving Korea comes with a long to-do list. Members of our community group for Americans in South Korea trade notes on NPS offices, airport pickups and the right forms.

Korea's National Pension and the lump-sum refund: what Americans pay in and how to get it back