About the new labor pension scheme
1. Individual pension accounts as the major source, supplemented by the annuity
The employer shall monthly contribute pension of the amount of 6% (or more) of
the monthly wage into the personal pension account established by the Bureau of
Labor for the labor. The company which hires more than 200 employees may be
covered the annuity insurance that comply with Insurance Law with the
agreement of the union, or the agreement and participation of 1/2 of the
employees when there is no reunion.
2. A cumulative and portable labor pension
After the enforcement of the new labor pension scheme, the labor that chose new
scheme may accumulate the pension which the employer contributes and transfer
it with him/her to another job. The pension will not be affected due to job
changing, plant closing or business termination of the company.
3. Applicable object range extended
(1) All native labors covered by the Labor Standards Act, including fixed?term
contract workers, part?time workers, etc. However, those pension reserved
according to the Private School Law are not included.
(2) Voluntary contribution objects: The employers actually engaged in the labor, the
native workers or commissioned managers that do not apply for the Labor
Standards Act for whom the employers agree to contribute for their pensions,
may voluntarily contribute the pension.
4. Minimum employer contribution rate is 6% of monthly wage
The monthly labor pension contribution rate of the employer shall not be less than
6% of the labor's monthly wages. When the annuity insurance is applied, the
pension insurance contribution rate shall not be less than 6% of the labor's
5. Tax incentives rewarded for labor voluntarily contribute
The labor may voluntarily contribute extra pension under 6% of the monthly wage.
The voluntarily contributed pension will be fully derived from the total annual
personal income and lower the tax amount and tax rate class. Provided whether
those who chose annuity insurance can enjoy the same tax exemptions is yet
finalized due to law amending issue at the Ministry of Finance.
6. Severance pay may be received as well
Labors that are covered by the new pension scheme in this act are also covered by
the working years in this act. 0.5 month of average monthly paycheck is
distributed every full year and 6 average monthly paycheck the maximum.
Severance for labors that are covered by both new and old pension schemes is
calculated in two ways. The working years in the old system are calculated
according to the Labor Standards Act (1 month a year), and those in the new
scheme are calculated according to the Labor Pension Act standards.
7. Pension is receivable since the age of 60 even while employed
No matter one's in?service or not, after the new scheme is launched, he/she may
withdraw the pension fund after the age of 60. Those with 15 or more working
years shall apply for monthly pension payments or lump sum pension payment;
however, for those who are less than 15 years of working shall apply for lump sum
8. The family may request for the deceased labor's pension
If a labor deceased before withdrawing the pension, the family or designated
person may request for lump sum pension payment. If a labor receiving monthly
pension payment deceased before average life expectancy, the monthly pension
payment will be stopped, and the remaining amount of his/her individual pension
account will be reclaimed by the family or designated person.
9. The employer's operating costs are clear
The employer shall contribute 6% (or more) of the monthly wage to the pension
fund account on a monthly basis for the labor, so that the operating costs are
made clear, severance, dismiss, and other controversial actions for avoiding
pension payment may be reduced, and the competitiveness of enterprises is
10. The minimum labor pension benefit is ensured
The future revenue of the individual pension account may differ from the
investment results. However, according to the Labor Pension Act, the use of
pension revenue may not be less than the 2?year time deposit rates offered by
local banks; if so, it will be complemented by the national treasury. In a word,
even under the worst condition, apart from the contributed cumulative principal,
there will be revenue equals to 2?year time deposit rates offered by banks when
the labor withdraws the pension in the future.
- From：Planning and Audit Division
- Last Update Date：2017-08-01
- Hit Rate：2422