Newsletter
PROGRESS OF WORKER RE-TIREMENT FUND LEGISLATION
On 31 December 2003, the Sanitation, Envi-ronment and Social Welfare Committee of the Legislative Yuan reviewed the draft Labor Re-tirement Pension Act. The committee reviewed all parts of the draft except for the provisions governing the transition from the old to the new system, which it held back for further consid-eration. It is clear from the completed portion that the main vehicle for pension provision under the new legislation will be portable personal pension accounts, with pension insurance as a secondary mechanism.
Except for business entities employing 200 or more workers which will be allowed to imple-ment pension insurance schemes with the ap-proval of the Council of Labor Affairs, in prin-ciple all other business entities will be required to make payments into workers' personal pension fund accounts. If a worker leaves employment, the account can be transferred to his new em-ployer. A worker who retires on reaching age 60 with an employment record of at least 15 years can draw a monthly retirement pension from his personal account. A worker who retires with less than 15 years' account contributions will collect a single lump-sum payment.
Employers must make payments of not less than six percent of the worker's monthly salary, be-ginning from the first year of employment. A worker may also make voluntary contributions of up to six percent of monthly salary. These voluntary contributions will be tax-exempt and can be deducted from the worker's net taxable income. The draft legislation also provides for extended life annuities to provide pensions to workers who survive beyond their residual life expectancy.