2017-09-18

Companies Penalized for Insufficient Allocation to Labor Pension Funds

Taiwan's Ministry of Labor's (MOL) goal this year for a 95% sufficiency in allocation to pension funds was achieved ahead of schedule in mid-August 2017. However, 5,794 corporations insufficiently allocated to their labor pension funds. Moreover, there were 57 cases in which sanctions were imposed for violation of the regulations, and most of these were imposed on companies engaged in the manufacturing and retail industries. In 13 cases companies were fined for second year at amounts from NTD 150,000.

The MOL's Department of Employment Welfare and Retirement indicated that the number of corporations that sufficiently allocated funds to their labor pension accounts is 106,000, and the amount of retirement pension funds reached NTD 81.9 billion this year. Compared to 2016, the rate attained is higher, and more than half of the companies with insufficient allocation employ less than 29 workers. As the amount of funds required is too high to allocate in one payment, local labor departments are working with these corporations to complete their allocations by installment.

Local labor departments issued 57 penalty notices and the total amount of fines imposed was NTD 6 million for companies with insufficient allocations. Companies in Taipei city were subject to penalties in 17 cases, followed by companies in New Taipei City in 14 cases, and then companies in Hsinchu County in 8 cases. In comparison, in 2016 46 penalty notices were issued and NTD 4.23 million in fines were imposed, the law was enforced more strictly in 2017.

In addition, county and municipal governments were found to be major entities failing to allocate sufficiently their old labor pension funds. Kaohsiung City had the highest insufficiency of NTD 2 billion, followed by Tainan City with an insufficiency of NTD 1 billion. The MOL's Department of Employment Welfare and Retirement indicated that many counties could not afford to allocate the significant amount of funds in one payment due to the merger of counties. However, these counties are allocating funds to their pension accounts by installment and thus no fines will be imposed.

To prevent employers from asserting wage arrears to repayment funds in order to avoid making contributions to their respective pension funds, the Legislature passed amendments to article 56 paragraph 2 of the Labor Standards Act to require employers to consider the balances of the individual pension accounts of employees who are eligible for retirement in the next year at the year-end of each year. In the event of insufficient allocation for pensions, such employers must allocate the full amounts before end of March in the next year, or the authority will fine said companies successively for each subsequent offense in amounts ranging from NTD 90,000 to NTD 450,000, and for serious violations, the name of the company and its responsible person will be announced.
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