On the 25th, President Lee Jae-myung ordered tougher eligibility requirements—such as verifying actual residence periods in Korea—regarding the controversy over "pension investing," in which foreigners receive an old age pension through subsequent payment (back payment) of national pension contributions, saying, "It is contradictory in itself that foreigners who have lived in the country for a short period qualify for back payment."
According to chief presidential spokesperson Kang Yu-jung, President Lee said this after receiving a report titled "Status and improvement plan for foreigners' national pension back payments" from Health and Welfare Minister Jung Eun-kyeong during a closed-door cabinet meeting at Cheong Wa Dae that day.
He went on, "We need to view this issue from the public's perspective and consider whether there is an urgent need to strengthen eligibility requirements by examining actual residence periods in Korea." Calling for stronger promotion of each ministry's policies, he also said, "Respond immediately to prevent misinterpretations or misunderstandings of policies, and in particular, explain changes in areas such as taxes expenditure or the tax system to the public in detail."
National pension back payment is a system that allows subscribers who were unable to pay premiums due to reasons such as unemployment, business closure or childbirth to pay premiums retroactively. It was introduced in 1999, and since November 2011, it has allowed payment of premiums for up to 119 months corresponding to periods excluded as a "spouse with no income" or a "basic livelihood recipient." The aim is to ensure income security in old age and to close pension blind spots for women with career breaks, among others.
The problem is that short-term resident foreigners exploit this system to become recipients of the old age pension. Under current rules, if a foreigner works in Korea and ▲ enrolls in the national pension for just one month, then ▲ retroactively pays 119 months of premiums in a lump sum, and ▲ thereby meets the minimum enrollment period of 10 years, they can receive an old age pension every month thereafter. Recently, such cases—centered on Chinese nationals—have been identified, sparking controversy. Accordingly, there is growing criticism that the very pathway by which foreigners receive long-term pensions through the back payment system should be overhauled.
In his opening remarks at the cabinet meeting that day, President Lee also said, "When you design a system, it cannot be perfect, so gaps arise," adding, "When gaps are found, swift fixes to fill those gaps are needed." He continued, "Whether problems have occurred cannot be fully determined by self-checks alone, so we must constantly look for issues during on-the-ground implementation."