Dormant insurance payouts for foreign workers hit record W32.3b

Unclaimed dormant insurance payouts owed to foreign workers in South Korea reached a record 32.3 billion won ($23.8 million) as of the end of June, with critics warning that benefits are failing to reach the workers they are meant to protect even as the foreign labor force grows.

Data submitted to Democratic Party of Korea lawmaker Park Hae-cheol of the National Assembly's Climate, Energy, Environment and Labor Committee by the Ministry of Employment and Labor showed that departure-end insurance paid to foreign workers last year totaled 113,483 cases worth about 457.4 billion won. Homeward-journey insurance paid out 50,482 cases worth about 24.5 billion won.

Departure-end insurance provides foreign workers with a severance-equivalent payment when they leave their workplace and depart the country. Homeward-journey insurance covers the costs of returning home. Under the Act on Foreign Workers' Employment, foreign workers holding non-professional employment (E-9) or working-visit (H-2) visas, along with their employers, are each required to enroll in the relevant insurance schemes.

Enrollment and payout figures have risen broadly alongside the expansion of the foreign workforce. The number of departure-end insurance contributions climbed from 56,134 cases in 2021 to 128,826 last year, while homeward-journey insurance contributions rose from 17,621 to 67,738 over the same period.

Payout volumes followed a similar trend: departure-end insurance claims increased from 66,908 cases in 2021 to 113,483 last year, and homeward-journey insurance claims rose from 39,427 to 50,482.

The concern is that insurance payouts eligible for disbursement are going unclaimed and lapsing into dormancy. As of the end of June, total dormant insurance funds owed to foreign workers stood at 32.36 billion won — up about 1.6 billion won from 30.76 billion won last year.

Dormant insurance refers to payouts that have become eligible for disbursement but were never collected by the beneficiary and have since passed the statute of limitations. Foreign workers may miss the claims process after departing the country or changing their visa status, prompting calls for more proactive guidance and payout management.

"As the scale of insurance enrollment and payouts for foreign workers has grown, unclaimed dormant funds have surpassed 32 billion won," Park said. "We must expand outreach efforts to recover dormant insurance funds far more actively, so that workers do not miss out on benefits they are rightfully owed."

Park added that the time had come to address the record-breaking dormant funds not only by returning them to workers, but also by developing plans for how to use the remaining balance.