Labor council moves forward with pension plan

As the July 1 deadline for the implementation of the reformed pension system is approaching, the Council of Labor Affairs (CLA) has begun urging employers to find out whether their employees will opt to stay with the old pension plan or switch to the new one.

"If an employee chooses to switch to the new pension plan, the number of years they've accumulated working under the old plan will be retained," said Lee Lai-hsi (李來希), director of the Department of Labor Standards under the labor affairs council, yesterday.

Flexibility

After the plan is initiated, workers will have a five-year window to change their minds about which pension plan to go with.

The new pension system, which is based on the Laborers' Pension Law (勞工退休條例), will require employers to deposit a minimum of 6 percent of an employee's monthly salary into an individual retirement fund.

The plan has raised concerns among both employees and employers, but the council has vowed to implement the plan.

Many older employees fear that they may lose their jobs once the new system is implemented, as the pension amount is calculated based on the number of years a person has worked.

Employers, meanwhile, view the requirements for monthly deposits under the new system as a financial burden.

In a meeting with the press on Thursday, council chairperson Chen Chu (陳菊) acknowledged that several corporations have pressed the CLA to put off implementation of the new pension system.

Limited Costs

However, Chen promised that the new pension system would begin on July 1 and cited a recent business survey to refute charges that the plan will significantly raise costs for businesses.

Human resources account for only 12.8 percent of overall company costs, according to the survey. The new plan would only increase overall costs by 0.4 to 0.6 percent, Chen said.

Under the current pension system, which is based on the Labor Standards Law (勞基法), contributions to employee retirement funds must be paid into a common fund managed by the government, but an employee loses the benefits if he switches employer.

According to statistics from the council, between 2001 and 2003, only 20,678 people were able to draw pensions from retirement accounts, equivalent to just 0.07 percent of the nation's workers.

The labor affairs council plans to publish pamphlets to educate employees about the new pension system and inform them of the legal regulations.