萬國法律事務所

Taiwan’s Labor Pension Act (LPA) has now been in force since July 1, 2005. As required by the LPA, an employer must contribute each month the amount of no less than 6% of an employee's monthly wage to the employee’s personal pension account (New Pension Plan).

However, it is estimated that approximately 1.6 million employees are under the pension system of the Labor Standards Act rather than the New Pension Plan. According to the Labor Standards Act, an employer must allocate to the retirement reserve funds at a rate ranging from 2 percent to 15 percent of the employees’ monthly wage per month. The pension reserve funds can only be used for the purpose of making pension payments or a severance payment. Nevertheless, some laborers cannot receive their pensions after they have retired and many labor-management disputes have arisen because employers have not complied with their obligation to allocate funds to the pension reserves.

Therefore, the Council of Labor Affairs has proposed amending the Labor Standards Act so that in addition to the allocation of the pension reserve funds, an employer must also allocate full pension amounts for the pension payments to an employee who will retire during the next year.

According to the amendments, the labor authority will notify employers to allocate sufficient funds to pensions, and the rank of the payment of labor pension and severance pay will be elevated to be the same as the rank of a credit of right with collateral. An employer who does not pay a full pension to an employee may be subject to criminal liability, but the extent of punishment has not yet been finalized.