Increase in National Pension Contribution Limits (effective from July 1, 2017)
June 30, 2017 | Social Security Programs
The Workplace-based national pension contribution is calculated by multiplying the insured person’s Standard Monthly Income by the contribution rate.
The contribution rates are currently 4.5% for the employer and employee respectively, total being 9%.
The Standard Monthly Income of an insured person is the monthly income reported by an employer, and adjusted on July 1st every year based on the insured person’s taxable income of the previous year. If the Standard Monthly Income is below or higher a certain level, a floor or ceiling apply to the Standard Monthly Income. The lower and upper limits are reviewed and updated on July 1st every year as well.
Effective from July 1, 2017, the minimum floor and maximum ceiling of the Standard Monthly Income rise to KRW 290,000 and KRW 4,490,000, respectively. They were KRW 280,000 and KRW 4,340,000 respectively during the period of July 2016 thru June 2017.
Consequently, the monthly minimum contribution limit of national pension for each party will be KRW 13,050 (=290,000*4.5%), and the maximum contribution ceiling will be KRW 202,050 (= 4,490,000*4.5%) from July 1, 2018 as shown in the below table.
.
(July 1, 2017 ~ June 30, 2018)
| Standard Monthly Income | Contribution Rate | Contribution | |
|---|---|---|---|
| Lower limit | KRW 290,000 | 4.5% | KRW 13,050 |
| Upper limit | KRW 4,490,000 | 4.5% | KRW 202,050 |
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For example:
1. Application of lower limit
In case of an employee whose standard monthly income is KRW 270,000, his/her monthly national pension contribution shall be KRW 13,050 on or after July 2017.
2. Application of upper limit
In case of an employee whose standard monthly income is KRW 6,000,000, his/her monthly national pension contribution shall be KRW 202,050 on or after July 2017.