MOL marks decadelong success of Labor Pension Act

2015/07/08

Taiwan’s Labor Pension Act continues to pay handsome dividends in its 10th year of existence, ensuring 99.8 percent of the workforce is covered by a compulsory pension plan, according to Minister of Labor Chen Hsiung-wen July 6.

“The system represents a major central government policymaking achievement in providing post-retirement security for the nation’s working class,” Chen said. “In balancing the needs of all parties involved, the system also strengthens labor-management relations and promotes social and economic development.”

Under the scheme, employers are required to contribute a minimum 6 percent of full- and part-time employees’ monthly pay to a portable individual pension account, with voluntary worker-funded contributions exempt from income tax.

The latest Ministry of Labor statistics show that as of the end of last year, the balance of 10.15 million fully protected individual pension accounts topped NT$1.31 trillion (US$42.06 billion) and averaged an annual return of 3.78 percent. To date, NT$38.3 billion has been paid to 390,000 retirees.

According to Chen, a worker with 35 years of employment can expect labor insurance and retirement benefits equal to 75 percent of preretirement income, a level recommended by the World Bank.

Under the previous system, an employee had to work for the same company and meet stricter minimum age and seniority qualifications to claim pension benefits. Around 1.31 million workers are subject to this scheme, with the fund size estimated at NT$631 billion.

Source: Taiwan Today (http://taiwantoday.tw/ct.asp?xItem=232271&ctNode=413)