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Sat, Feb 03, 2001 - Page 18 News List

CEPD offers pension hike plan

SOFTENING THE BLOW The Council for Economic Planning and Development wants to prorate a hike in employer's pension fund contributions over three years

By Stanley Chou  /  STAFF REPORTER

The government's planning body said yesterday that a proposal to raise payroll pension deductions should be staggered over a three-year period to reduce its impact on the economy.

After the Council of Labor Affairs (勞委會) earlier this week proposed that employers be required to raise their minimum contribution rate (提撥率) on labor pension from the current 2 percent to 6 percent, Council for Economic Planning Development (CEPD, 經建會) officials said the hike should be prorated over three years to avoid strong pressure on the domestic economy.

CEPD officials also disagree that labor retirement age be lowered from the current 60 years of age to 55, since it's unlikely to be beneficial to most labors.

In a draft on the labor pension system, the Council of Labor Affairs preliminarily decided that employers would have to raise their minimum contribution rate.

After the new law is enacted, companies and employers would have a one-year grace period to comply with the new regulations.

However, CEPD officials said yesterday that since the nation's economy remains weak and working hours have recently been shortened, it would be more appropriate to raise employer's contribution rate slowly in order to avoid straining their operating costs.

CEPD officials said more than 90 percent of domestic companies, mostly medium and small companies, currently contribute nothing towards the labor pension.

Many of these companies could not even reach the current legal requirement of 2 percent, CEPD officials said.

Even given a year's grace period, it's unlikely that these companies would be able to carry the burden of contributing 6 percent.

CEPD officials said they support the Council of Labor Affairs' proposal to change the current pension system to a personal pension account.

The change is aimed at removing the current restriction that a laborer must work for a single company continuously for 25 years before he or she would be eligible to apply for their retirement pension.

However, the CEPD does not agree to raising the contribution rate.

The Council of Labor Affairs also suggests heavy penalties for those who do not contribute their required amount.

The penalty starts at three percent of the original required amount and goes to 200 percent.

However, since only about 7 percent of companies in Taiwan currently pay their pension to the Labor Pension Fund, the CLA's ability to effectively police the law remains to be seen.

The draft by the Council of Labor Affairs is going to be sent to the Legislative Yuan in March for a vote.

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