Ten firms chosen to manage labor pension funds

By Angelica Oung and Kevin Chen  /  STAFF REPORTERS

Tue, Sep 18, 2007 - Page 12

The Council of Labor Affairs has given the green light to 10 investment trust companies to manage the government's NT$30 billion (US$906 million) labor pension funds, the council said on Saturday.

A total of 16 investment trusts had bid to manage the funds, the council said in a statement posted on its Web site.

RESPONSIBILITIES

The 10 successful applicants, chosen by a panel of professionals assembled by the council, would be entrusted to manage NT$3 billion of the funds each, the statement said.

The council did not say when the investment trusts would start managing the funds and invest the money in the local stock market via discretionary managed accounts.

On March 2, the legislature passed the Organic Law of Labor Pension Funds Supervisory Commission (勞退基金監理會組織法) which enabled the establishment of a supervisory committee to both exercise and monitor the labor pension funds.

MANAGEMENT

The committee was established on July 2 to manage the NT$600 billion that has accumulated in the labor pension funds -- the 6 percent contribution from employees' monthly wages -- under the portable individual retirement account scheme implemented in July 2005.

Based on the current regulations, the labor pension funds are allowed to invest more than 40 percent of their total capital into the stock market.

In other words, this meant that approximately NT$240 billion is available for investment in equities, President Chen Shui-bian (陳水扁) said at the committee's launch ceremony on July 2.

MAKING THE LIST

In the statement, the council said that Grand Cathay Securities Investment Trust (大華投信), First Global Investment Trust Co (元大投信), Jih Sun Securities Investment Trust Co (日盛投信), ING CHB Fund (安泰投信), PCA Securities Investment Trust Co (保誠投信), Fuh-Hwa Investment Trust Co (復華投信), Cathay Securities Investment Trust Co (國泰投信), Fubon Securities Investment Trust (富邦投信), Capital Securities Investment Trust (群益投信) as well as Prudential Financial Securities Investment Trust Enterprise (保德信投信) had been selected to manage the funds.

The council said that it had selected the Bank of Taiwan (台灣銀行) as the custodian bank.

INVESTMENTS

As well as investing in the local stock market, the funds will also be allowed to invest in bonds and derivatives, both locally and overseas.

Previously, the funds had been invested in bank deposits, which offer a much lower return.

The committee said it expects the size of the funds to jump to NT$350 billion by the end of next year and NT$1.13 trillion by 2015.