萬國法律事務所

While the Council of Labor Affairs recently proposed an amendment to the Labor Pension Act, critics say that the amendment does not address the insurance companies’ concerns in connection with undertaking the business of selling labor retirement annuity insurance policies. The amendment allows any enterprise with more than 200 employees to apply for labor retirement annuity insurance as long as its labor-management committee consents. However, insurance companies complain that the amendment is insufficient and fails to address to the real problem for them in selling the relevant policies, namely, the risks resultant from the unclear calculation of the guaranteed minimum return rate.

The new retirement pension plan entered into force more than four years ago. However, none of the labor retirement annuity insurance policies under the new regime have been sold. In fact, the seven insurance policies previously approved by the Financial Supervisory Commission under the Executive Yuan have been withdrawn or become void. Currently, there is no labor retirement annuity insurance policy available in the market.

According to insurance companies, under the labor retirement annuity regime, the insurer is required to guarantee the minimum return rate to the insured when the market goes down but is not allowed to retain any profit when the market goes up. Hence, insurance companies may not properly manage the risk. Moreover, when an employee switches his/her employment, the insurance policy will presumably be changed accordingly. That makes it very difficult, if not impossible for the insurer unable to make a long-term investment to ensure the revenue.

To solve this problem, insurance companies have proposed that the amendment provide a waiting period of 4 to 5 years. If an employee wishes to terminate his insurance policy during the waiting period, the insurer would then only need to return the market value of the premium, regardless of the guaranteed minimum return rate. However, the Council of Labor Affairs disagrees with this proposal, and thus, the same was not included in the amendment to Labor Pension Act this time. Given this, it is quite likely that insurance companies will remain reluctant to undertake the business of selling labor retirement annuity insurance policies any time in the near future.