A trial to start in June next year would allow employees to invest in a fund managed by the government and FundRich Securities Co Ltd (基富通) to see whether returns are higher than those of the Labor Insurance Fund (勞保基金), the Financial Supervisory Commission (FSC) said on Wednesday.
Ten thousand public and private-sector employees would be given the chance to enroll in the scheme, including 4,000 existing FundRich clients, the commission said, adding that the trial would run for at least two years.
Participants cannot withdraw from the Labor Insurance Fund — managed by the Ministry of Labor — as the trial fund cannot replace the current fund, it added.
FSC Chairman Wellington Koo (顧立雄), who has expressed support for the idea of dollar-cost averaging, an investment technique that involves buying a fixed amount of particular assets on a regular schedule, said that the trial fund would employ that strategy and require participants to invest at least NT$3,000 each month.
Although the commission cannot guarantee any returns on investment, the trial fund is expected to yield higher returns, as the dollar-cost averaging strategy should be more resistant to market volatility, Koo said.
Asked if the trail fund might replace the Labor Insurance Fund in the future, Koo said it would be a challenge to persuade lawmakers, as the trail fund could not promise fixed returns like the current fund does.
To encourage participation in the trial, entrants would not be charged handling fees, which are usually 1 to 2 percent annually of the funds under management, the commission said.
Participants are to be offered four types of funds, with different levels of risk and potential returns, Koo said.
The commission would set up a review group in January that includes representatives from the labor ministry, Securities Investment Trust and Consulting Association, and Taiwan Depository and Clearing Corp.
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