The China Post staff
The Cabinet-level Council of Labor Affairs (CLA) has revised the labor insurance statute to change the pension for retired insured workers into an annuity payment, in a bid to better take care of the post-retirement life of insured workers, a top CLA official said yesterday.
Chairman Lee Ying-yuan of the CLA said that his council will submit the revised statute to the Cabinet for approval this month, and that the new pension system can be put into practice by the end of the year at the earliest, if it clears the floor of the Legislative Yuan in time. Lee said in line with the new pension system, the labor insurance rate will be set at 6.5 percent of the insured monthly pay, up from the existing 5.5 percent.
In addition, the labor insurance rate will remain unchanged at 6.5 percent in the first two implementing years of the new pension system, and then the rate will be hiked by 0.5 percentage point every two years. Accordingly, the rate can surge to 11 percent after 20 years of labor insurance coverage.
Insured workers will be allowed two optional formulas for calculating their annuity on a monthly basis. One is the insured monthly salary x (times) 1.2 percent x the number of years of insurance coverage, and the other is a fixed monthly payment of NT$3,000 + (plus) (insured monthly salary x 0.6 percent x the number of insurance years.) Meanwhile, insured workers will also be allowed to receive the elderly pension payment on lumpsum basis. But the payment will be calculated based on the average insured monthly pay during their labor insurance coverage.
According to the revised statute, only those who are aged over 45 and who have been covered by the labor insurance system for at least 15 years at the time when the revised statute takes effect will be allowed to receive the pension payment on a lumpsum basis. At the moment, there are around 4.5 million insured workers qualified to do so.
By contrast, those who are aged under 45 and whose labor insurance span is under 15 years at the time when the new pension system is put into practice will be allowed to receive the annuity on a monthly basis. There are now some 4 million insured workers subject to the monthly annuity payment.
Any insured worker will not be allowed to receive the elderly pension payment either on a lumpsum basis or a monthly basis until he retires after 60 years of age. At yesterday’s legislative session, Lawmaker Lai Shyh-bao of the opposition Kuomintang (KMT) noted that the planned annuity payment system for retired insured workers is only a kind of dream for workers, designed to prevent a run on the elderly pension payment funds, which still show a shortfall of NT$680 billion if as many as 1.5 million qualified insurers move to simultaneously claim such payment on a lumpsum basis. Another KMT lawmaker Hou Tsai-fong said that the mandatory practice of allowing those who are aged under 45 and who have been insured for less than 15 years to only receive the annuity on a monthly basis should be dropped or she will block the revised statute from being ratified by the legislature.