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Legislature passes delayed pension bill

The legislature yesterday passed a long-stalled bill designed to set up a commission to manage labor pension funds that have sat idle since a new labor pension scheme was adopted two years ago.

"I am confident that the return on investment [for the fund] will be as high as 4 percent, twice as high as the interest rate on time deposit savings over two years," CLA Chairman Lee Ying-yuan (李應元) told a press conference in the legislature.

As of last December, more than 4.29 million employees had opted to pay into the new scheme, accounting for 76.82 percent of all workers covered by the Basic Labor Law (勞動基準法).

The 4.29 million workers had deposited more than NT$140.7 billion (US$4.276 million) in total into their individual accounts up till Feb. 9, according to the CLA.

Under the new labor pension scheme, which became effective on July 1, 2005, employers are required to contribute 6 percent of a worker's salary every month into individual portable pension accounts administered by the government.

The new system ensures workers the right to pension benefits, compared to the old pension system, under which employers were able to shirk their responsibility to make pension contributions.

However, workers who chose the new scheme have so far failed to earn extra profits from the fund as a result of the stalled legislation.

"About 4 million workers lost about NT$6.7 billion because of the fund's idleness last year," Lee said.

In accordance with the bill, the average return on investment for the fund in three years may not be lower than the interest rate for two year time deposit savings set by the Bank of Taiwan (台灣銀行), which has averaged 2 percent in recent years.

As the bill requires the government to make up the shortfall if the guaranteed return on investment fails to be met, it has so far spent NT$400 million in doing so.

"The passage of the bill today will help workers enjoy a better retirement and benefit the public in terms of saving treasury expenditure," said Democratic Progressive Party Legislator Lu Tien-lin (盧天麟) at the press conference.

Lawmakers across the political spectrum joined representatives of labor unions at the press conference to hail the legislation.

The new system is expected to attract NT$170 billion in annual contributions.

Meanwhile, the CLA issued a press statement that said that the 21-member commission would start operations in about six months time.

The commission will be set up under the administration of the CLA.

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