How does social contribution works in South Korea?

In this article, we cover: 

What are the total contribution rates?

What are the mandatory contributions for employees to social security in South Korea?

What are the mandatory contributions for employers to social security in South Korea?

In South Korea, the social security program offers universal healthcare, the National Pension Fund (NP), Employment Insurance (EI), and Industrial Accident Compensation Insurance (WCI). Universal Healthcare is funded and distributed through the National Health Insurance (NHI) scheme. Both employers and employees contribute towards National Health Insurance.

Both employees and employers contribute to social security in South Korea, with each contribution of a percentage of the employee’s gross salary at each pay period.

What are the total contribution rates?

• National Pension: 9% of the employee’s monthly salary up to KRW 5.9 million (the minimum payable is KRW 0.37 million).
• National Health Insurance: 7.998% of the employee’s monthly salary.
• Unemployment Insurance: 1.8% of the employee’s monthly salary.

What are the mandatory contributions for employees to social security in South Korea?

All employees in South Korea must make contributions towards the National Pension fund, the National Health Insurance scheme, and Unemployment Insurance.

For 2023, social security contributions for employees in South Korea are as follows:

• National Pension: The employee contributes 4.5% of the monthly salary up to KRW 5.9 million (the minimum payable is KRW 0.37 million).
• National Health Insurance: The employee contributes 3.999% of the monthly salary. The employee contributions to the NHI program are deductible in calculating taxable income.
• Unemployment Insurance: The employee contributes 0.9% of the monthly salary.

What are the mandatory contributions for employers to social security in South Korea?

Employers in South Korea make mandatory contributions towards the National Pension fund, the National Health Insurance Scheme, Unemployment Insurance, and the Industrial Accident Compensation Insurance scheme. Taxes and mandatory contributions are deducted at source from the monthly payroll.

In 2023, employer contributions towards social security are as follows:

• National Pension: Customers contribute 4.5% of the employee’s monthly salary up to KRW 5.9 million (the minimum payable is KRW 0.37 million).
• National Health Insurance: Customers contribute 3.999% of the employee’s monthly salary.
• Unemployment Insurance: Customers contribute between 1.15% to 1.75% depending on the number of employees and type of industry, which means, in addition to the 0.90% contributions to EI by the employee, Customers are required to make 0.25%- 0.85% contributions to employment stabilization insurance and occupational competency development insurance.
• Industrial Accident Compensation Insurance: Customers contribute somewhere between from 0.7% to 18.6% of the employee’s monthly salary, depending on the type of industry.