Newsletter
PERSONAL ACCOUNTS PRO-POSED FOR PENSION FUNDS
In late January 2001 the CLA finished the draft of Labor Retirement Fund Statute. The main points of the draft are as follows: a new system of payments into individual retirement fund ac-counts will be introduced, with payments to be made at a rate of 6% of the employee's monthly salary as declared for labor insurance and na-tional health insurance purposes. There will be a one-year wait before the introduction of the new system. The conditions for workers to draw on their retirement funds will be: having completed 15 years' employment and reached age 55; hav-ing reached age 60; having completed 25 years' employment; or being unfit to work due to physical or mental disability.
The CLA is currently considering two schemes for balancing severance pay and retirement funds. Under Scheme A, the employer will be able pay severance pay out of money already paid into the employee retirement fund account, and only where the retirement fund is less than the sev-erance pay due will the employer have to make up the difference. Scheme B is a direct modifi-cation of the existing system, with severance pay reduced to half a month's salary for every full year of employment, none of which may be drawn from the retirement fund. At present, the CLA favors Scheme B.
Regarding the rate of payment into retirement funds, the head of the CLA Department of Labor Conditions states that under the CLA's current proposals, after the new statute comes into force there will be a year's buffer period before the new rate of 6% of monthly salary comes into effect.
As for how the number of working years accu-mulated under the old retirement fund system will be credited under the new system, the CLA states that within six months after implementa-tion of the new system, employees may make a once-only choice between the old system and the new. The new system will apply to all employ-ees who do not opt for the old system within that time. Those who do opt for the old system will have the same retirement conditions as at present, i.e. to be able to draw on their pension funds they must have worked for the same employer for at least 15 years and reached age 55, or have worked for the same employer for 25 years.