Pension in Hagwon Contract?

Should I be concerned if my hagwon does not include national pension in my teaching contract?

First of all, it is illegal for a hagwon NOT to make at least 50% of your monthly pension contributions. They normally withhold 4.5% from your monthly salary and they will match the other 4.5%.

When you finish your teaching contract and just before you leave Korea permanently you can apply to the Korean government for your pension refund, but this depends on your country of nationality.

Teachers from Canada, the US, and Australia get a lump sum payment when they leave Korea.

If you’re from a different English speaking country such as the UK or Ireland you’ll have to wait until your 65 to obtain your pension refund. The reason they do this is because there is a reciprocal pension treaty for Koreans who work in these countries as well.

These pension deductions should show up on your monthly pay statement from your school.

The only way you might not see these pension contributions is if your hagwon registered you as a “contractor”.

If they classify you as a contractor as opposed to a permanent employee, then they aren’t required to make pension contributions. Some hagwons get around the pension contributions by classifying teachers as “contractors”.

What’s important to remember is that in order to qualify for an E2 visa, you must be classified as a “permanent employee” with a approximately 30 hours of teaching per week written into your contract. If you’re full-time, the school can’t assign “contractor” status to a teacher since full-time  = E2 visa.

To sum up, if you’re an American, Canadian, or Australian, the pension contributions seem worth it because you’r school will save 4.5% of your monthly income which you can get back once you leave Korea. This could be after just one year or however many years you decide to teach in Korea. It really adds up to because your employer matches the 4.5% for a total of 9% per year.

Now if you’re from the UK or Ireland then the pension scheme isn’t too attractive, because you’re paying into a plan that you won’t receive until your 65. That’s a long ways away! Unless that rule has changed, your 4.5% monthly pension contributions are more like a tax which you will probably forget to collect when you’re old and grey, most likely living in another country.

To learn about the pension agreement between your country and Korea, visit NPS Korea and click on your country’s flag.

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