Newsletter
DRAFT LPA ENFORCEMENT RULES UNDER REVIEW
The Council of Labor Affairs has finished drafting the Enforcement Rules of the Labor Pension Act (LPA), and sent its draft to the Ex-ecutive Yuan for review on 1 December 2004. The draft Rules provide that when an employer enquires of an employee in writing whether the employee wishes to continue with the Labor Standards Act (LSA) pension scheme or to switch to the LPA scheme, the employee should make his own choice, which should be con-firmed by the employee’s signature. The draft explicitly provides that a worker who opts for the LPA pension system may inform the Bureau of Labor Insurance (BLI) himself. If the choice reported by an employer differs from that declared by a worker, the worker’s choice should govern. If a worker has two or more jobs con-currently, each employer must pay pension fund contributions or annuity insurance premiums, depending on the pension scheme the worker is enrolled in.
When an enterprise is restructured or sold as re-ferred to in the LSA, or becomes the subject of a merger or acquisition under the Corporate Mergers and Acquisitions Act, and workers are retained from an enterprise that is wound up, assigned, or demerged, their LPA pension fund contributions must in all cases be taken over by the surviving, newly incorporated, or acquiring company. As for workers who are not to be re-tained, their original employer should pay out their retirement benefits or severance pay prior to the restructuring, sale, or merger.
If an employer agrees with an employee to pay out contributions carried over from the LSA pension scheme at a rate not less than that pre-scribed by the LSA, and withdraws money from its worker retirement fund account with the Central Trust of China to do so, the employee can choose to have all or part of the amount transferred into his IPA with the BLI, or to his employer’s annuity insurance. If a worker elects to have the entire amount transferred, his number of contributing years under the LSA system can be credited to the LPA system.
In principle, pension fund contributions paid by an employer for its employees should all be paid at the same rate. However, an employer may pay contributions at a higher rate for individual employees, in which case the employer should report each case to the BLI. A worker or mandatory manager who is not subject to the LSA (ROC nationals only) may make voluntary contributions with the employer’s consent, in which case the employer may also make con-tributions on the worker’s behalf, at a rate not exceeding that of the worker’s own voluntary contributions, and in any case not exceeding 6%. If a worker who is already receiving a retirement pension or has already received a retirement payment resumes employment, his or her contribution record should be restarted from zero, and the employer should still pay pension fund contributions for the worker in accordance with the LPA.
For an employer intending to implement an an-nuity insurance scheme, the number of employ-ees is the total number of the workers employed, including those at branch offices and subordinate entities, on the first day of the month in which the application is filed. If, after an annuity insurance scheme is implemented, the number of employ-ees falls below 200, or the number opting for annuity insurance falls below half the total number employed, the employer may continue with the annuity scheme, and the annuity insur-ance contract is not affected.
If the total number of employees of a financial holding company and its subsidiaries is 200 persons or more, in addition to the financial holding company and its subsidiaries being able to apply separately to implement annuity insur-ance schemes, they may set up a joint scheme with the consent of the financial holding com-pany’s labor union, or if it has no labor union, if at least half the total employees agree to par-ticipate in the scheme.
To discourage workers from leaving the labor market excessively early, and to facilitate the transition between IPAs and annuity insurance, the minimum age for receiving retirement bene-fits under an employer’s annuity insurance scheme may not be less than 60. To protect workers’ rights, an employer may not amend or terminate an annuity insurance contract without its workers’ consent. Workers who suffer losses due to an employer’s amending or terminating such a contract without consent may seek dam-ages from the employer.