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Outline of Social Security Programs in Korea

Korea has experienced rapid socioeconomic changes arising from industrialization, urbanization, and family

nuclearization since 1960. Such changes have inevitably caused various social problems, leading to the need of the

Social Security Systems. Accordingly, a series of laws and regulations have been enacted since 1960 to establish

the Social Security System, and a variety of social security programs were developed, including social insurance,

public assistance and social welfare service.

1. Social Insurance Programs

4 kinds of compulsory social security system

A. National Pension

B. Health insurance

C. Employment insurance

D. Industrial accident compensation insurance

1. Social Insurance Programs

Public Pension Scheme

The Public Pension Scheme consists of the National Pension Scheme for employees of private companies and the

self-employed persons, Government Employees Pension Scheme, Military Personnel Pension Scheme, and Private

School Teachers Pension Scheme.

In addition, there are Individual Pension Plan for the general public as a private pension and Retirement Payment

Scheme which, although not a pension plan, functions as a post-retirement income protection mechanism for those

working in workplaces with more than 5 employees.

National pension is withheld every month by the rate of  9% (4.5% is employee's burden, another 4.5% is company's

burden) of standard salary. Standard salary is usually stable within the year.

1. Social Insurance Programs

Health Insurance Scheme

The Health Insurance Scheme was introduced in 1977 to cover private firms with more than 500 employees. Since

then, the scheme has been continuously extended to cover government officials and private school teachers in July

1979 and virtually all employees, employers, and the self-employed in urban areas throughout the country in July

1989. Medical insurance associations, which had been separated into Workplace based and Regional associations,

united into and operated as the National Health Insurance Scheme since July 2000.

National Health Insurance Scheme mostly provides in-kind benefits such as medical services. The Ministry of Health

and Welfare and the National Health Insurance Corporation are responsible for its administration. In addition,

foreigners may be covered under the Scheme if they apply for it.

Health(medical) insurance is withheld every month by the amount of 4.31% (2.155% is employee's burden, another

2.155% is company's burden for the year 2005) of standard salary. Standard salary usually is stable within the year.

There is no maximum standard salary like National pension, so there is no upper limitation for this item.

1. Social Insurance Programs

Employment Insurance Scheme

The Employment Insurance Scheme was introduced in July 1995 to cover private firms with more than 30 employees.

Now it covers all private firms in the country. Under the Scheme, foreigners may apply for a voluntary membership, if

they have a stay status with work permit.

The benefits under this Scheme are composed of three components: cash benefits during involuntary

unemployment, financial support to employers for the stabilization of employment, and financial support to companies

to improve the working ability of workers. The Scheme is administered by the Ministry of Labor and the Korea Labor

Welfare Corporation.

Every March of each year, company pay whole year's insurance in advance by computing 1.15% of last year's

salary total. After payment of whole year's contribution in advance, company withhold 0.45% of each employee's

salary every month. As a result, the contribution is allocated as follows.

Employee's contribution

0.45%

Company's contribution

0.70%

1. Social Insurance Programs

Industrial Accident Compensation Insurance Scheme

The Industrial Accident Compensation Insurance Scheme was introduced in 1963, and the coverage of the Scheme

has been extended over time. At present, all workplaces, including foreigners, are covered. The Scheme provides

in-kind benefits such as medical treatment and various cash benefits such as leave benefits, disability benefits, and

survivor benefits. The Scheme is administered by the Korea Labor Welfare Corporation under the supervision of the

Ministry of Labor.

The rate is diversified depending on the scope of business.

This is paid only by the company.

There is no employee's contribution on this.

Authorities handling social securities in Korea

National Pension

National Pension Corporation

www.npc.or.kr

Health Insurance

National Health Insurance Corporation

www.nhic.or.kr

Employment insurance & Industrial accident compensation insurance

Korea Labor Welfare Corporation

www.welco.or.kr

2. Public Assistance

The Public Assistance Scheme is designed to provide a minimum standard of livelihood for those who cannot

maintain their livelihood by themselves owing to physical disability, disease, old age, or other reasons. Public

Assistance Scheme includes the National Basic Living Security Scheme, Medical Aid, Disaster Relief, Aid for the

Disabled Veterans, etc.

The National Basic Living Security program aims to fill the income shortage of those who meet certain asset criteria

and earn less than the minimum cost of living. The minimum cost of living, calculated every 5 years, varies depending

on the number household members and is being indexed to the annual rate of price increase. The National Basic

Living Security Scheme provides residence, medical, educational, delivery, funeral, and self-support benefits. The

last among these, self-support benefits, aim to encourage those aged from 18 to less than 60 with labor capability to

support themselves.

The self-support benefits include occupational training, job search assistance, social enterprise project, public

works project, and voluntary service to help for start-ups. Those with labor capability are 'conditional beneficiaries'

who are paid benefits for the cost of living only if they try to maintain their livelihood by themselves.

3. Social Welfare Service

Social Welfare Service provides those in need of social protection with admissions to special welfare institutions, free

meals, occupational training, employment service, and counseling. And especially, the Korean government has tried

to improve the quality of the Social Welfare Scheme by expanding welfare facilities for those with severe or multiple

disabilities and by providing comprehensive services.

Social Welfare services have been provided largely for the socially vulnerable ones such as the disabled, old-aged,

children, woman, etc. Recently, however, their scope of coverage is being extended to enhance the quality of life of

community residents through continuous cooperation between people and government, encouraging voluntarily

services and fostering connections between those in need of help and those offering help.