PPP calls out pension loophole letting foreigners collect lifetime benefits after one month of contributions

Kim Tae-gyu, PPP's chief floor spokesperson, demands full disclosure of outflows

'Is it fair to ask Koreans to pay more while giving this away to foreigners?'

President Lee says short-term foreign residents gaining back-payment eligibility 'is a contradiction'

The People Power Party on Sunday called on the government to disclose the full scale of a controversy over foreigners — including Chinese nationals — receiving lifetime national pension benefits after making just one month of contributions and then paying back premiums in a lump sum, and demanded corrective measures.

Kim Tae-gyu, the PPP's chief floor spokesperson, said in a statement that a Chinese national who worked in South Korea for one month had paid 119 months' worth of premiums in a single lump sum and was now receiving a lifetime old-age pension. "This is an actual case confirmed by the National Pension Service," Kim said, adding that "a system designed to shore up the retirement security of people with broken career histories has become a channel for buying pension eligibility with a lump sum of cash."

Kim said that people who obtained pension benefits this way were also registering spouses, children and parents based in China — people who had never set foot in South Korea — to collect additional payments. "There are no rules to screen for domestic residency and no cap on the number of dependents," he said. "It amounts to using premiums paid by our citizens to support families living in China."

He then turned his criticism toward the government, saying that Korean citizens must contribute for a full 10 years before they can receive any pension. "Every year there is an uproar over when the fund will run dry, and the government says it needs to collect more in premiums," he said.

Kim said the government had "left the money leaking out this way untouched" while telling citizens to pay more. "Is it fair to ask our people to pay more while handing it out like this to foreigners?" he said.

He called on the government to act immediately — overhauling eligibility rules for foreigners seeking back-payment status and the requirements for dependent family pension payments, and disclosing to the public how much has gone out. "It is money paid by our citizens," he said.

The controversy emerged after reports surfaced of foreigners who enrolled in the national pension for just one month while working in South Korea, then paid back premiums for prior periods in a lump sum and began receiving monthly old-age pension payments for life.

The back-payment system was designed to allow people to make up contributions for periods when they were unable to pay — due to job loss, business closure, marriage, childbirth or similar circumstances — after the fact.

As the controversy grew, the Cabinet meeting chaired by President Lee Jae Myung on Monday also received a report on the current state of back payments by foreign nationals under the national pension system and proposed remedies.

At the meeting, Lee asked about the number of foreigners who had used the back-payment option, then said that "it is a contradiction in itself for foreigners who resided in the country only briefly to be eligible for back payments," and ordered that eligibility requirements — including minimum periods of actual domestic residence — be tightened urgently.

Lee also said that "no system can be perfect when it is designed, so gaps will appear," and directed officials to move quickly. "When a gap is found, it needs to be patched as fast as possible. Please come up with an alternative swiftly," he said.

shindw@heraldcorp.com