Tue, May 08, 2007 - Page 2 News List

Fines on pension payment default may be lowered

By Angelica Oung  /  STAFF REPORTER

The Legislative Yuan yesterday passed on first reading a controversial amendment setting a limit on fines levied on employers who default on labor pension payments.

Advocates of the change say that draconian penalties are forcing businesses into bankruptcies, while labor groups say that heavy fines are needed to safeguard workers' pensions.

Currently, employers who fail to submit labor pension payments for their employees on time are fined 3 percent of the amount owed on a daily basis.

Although the measure has kept the rate of defaults low, some companies have racked up fines that are 33 times larger than the total amount owed.

The proposed amendment would keep the daily penalty rate at 3 percent, but would also set a limit on the cumulative fine at 100 percent of the original amount owed.

Despite the proposed change, the fine on defaulting on pension payment would still be more stringent compared to other obligations, a Bureau of Labor Insurance official said.

"Fines for unpaid National Health Insurance payments are capped at 15 percent of the total amount owed," said Luo Wu-hu (羅五湖), a manager at the bureau's Labor Pension Department.

"Meanwhile, the cap for unpaid Labor Insurance and Income Tax payments is 30 percent. A 100 percent cap [on pension payment defaults] is still very high," he said.

Luo said that existing policies governing pension defaults were "unreasonable" and "onerous" since there is currently no cap on the amount of fines.

Bureau of Labor Insurance statistics showed that businesses owed approximately NT$560 million (US$16.9 million) in labor pension payments, which have generated more than NT$4.5 billion in unpaid fines.

Once approved, the change will be retroactive, meaning that past fines in excess of 100 percent of the owed amount will be returned to businesses.

Labor representatives have expressed concern about the proposed change.

"We are talking about the future livelihood of workers," said Hsieh Chuang-chih (謝創智), secretary general of the Taiwan Confederation of Trade Unions.

Hsieh argued that stiff fines were necessary because employees depend on their employers to keep up with pension payments for their retirement pension.

"The government should use the fines they collect to guarantee pensions for workers instead of putting it into the general fund," Hsieh said.

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