The benefit provisions in Article 5 apply to old-age, survivors and invalidity (i.e., long-term disability) pensions under the Korean Social Security system.
Benefits under the Korean system are paid to workers who meet the applicable eligibility requirements, including minimum length-of-coverage and recency-of-work requirements. Under Article 5, Korea will combine U.S. coverage with periods of Korean coverage so that people who do not meet the minimum coverage and recency-of-work requirements may become eligible for partial benefits.
Korea has a number of old-age benefits, each with specific eligibility requirements. The full basic old-age pension is payable to a person who has stopped working, who is at least 60 years of age (to be gradually increased to age 65 in the period 2013-2033) and who has at least 20 years of coverage under the Korean system. Reduced old-age benefits are payable as early as age 55 with 10 years of coverage.
The amount of an old-age pension is based on the worker's length of coverage and average indexed earnings (known as "average standard monthly income," or ASMI) over the period he or she was covered under the Korean system. The pensioner can also receive a supplementary benefit for a dependent spouse, children, and parents. Legislative amendments effective in 1999 have provided for the splitting of old-age pension entitlement between divorced spouses.
The full basic old-age pension amount equals 1.8 times the sum of the average monthly wage of all covered workers for the year before entitlement and the pensioner's ASMI. For each year of coverage in excess of 20, the benefit amount is increased by 5%.
To qualify for disability benefits, a person must have been working in covered employment at the time he or she became disabled. If the person is totally disabled, the benefit is computed like an old-age pension. If the person is partially disabled, the pension may be reduced up to 40% of the full amount, depending on the degree of disability.
For survivors benefits to be payable, the deceased worker must have been contributing at the time of death or must have had at least 10 years of contributions. Survivors benefits are payable to widows, widowers, children, parents, parents-in-law, grandchildren, grandparents, and grandparents-in-law. Widowers must be over age 60 or severely disabled to qualify. Children must be under age 18 or severely disabled. Parents and grandparents must be at least age 60 or severely disabled. A lump-sum death benefit is paid to surviving dependent relatives such as siblings, nieces and nephews not eligible for other survivors benefits. If the deceased person had at least 20 years of coverage, the survivors benefits are 60% of his full old-age pension. Benefits are reduced for those who had less coverage. Persons who do not meet the eligibility requirements for benefits, may, under certain conditions, receive a lump-sum refund of employee and employer contributions plus interest. The refund is payable to a person who has attained age 60, but who has less than 10 years of coverage, or to the survivors of a person who dies without sufficient coverage to establish the right to survivors benefits.
If the deceased person had at least 20 years of coverage, the survivors benefits are 60% of his full old-age pension. Benefits are reduced for those who had less coverage.
Persons who do not meet the eligibility requirements for benefits, may, under certain conditions, receive a lump-sum refund of employee and employer contributions plus interest. The refund is payable to a person who has attained age 60, but who has less than 10 years of coverage, or to the survivors of a person who dies without sufficient coverage to establish the right to survivors benefits.