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About the new labor pension scheme

  • Publish Date:2016-11-24

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
    monthly wages.

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
    pension payment.

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
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