Newsletter
CLA RULINGS ON RETIREMENT RESERVE FUND COMMITTEE
The new pension scheme under the Labor Pen-sions Act (LPA) applies to all employees newly employed by an employer since the LPA took effect on 1 July 2005. In recent interpretations, the Council of Labor Affairs (CLA) addressed doubts as to whether a business entity newly es-tablished after the LPA took effect as a result of M&A activities is required to appropriate the retirement reserve fund and set up a retirement reserve fund supervisory committee for the old pension scheme under the Labor Standards Act (LSA). The CLA stated that in case of M&A activities as defined by relevant legislation such as the LSA or the Corporate Mergers and Ac-quisitions Act, the newly formed business entity is required by law to assume the retained em-ployees' pension scheme(s), and to recognize their years of service at the previous employer. If the retained employees' seniority include any who have opted to continue under the old pen-sion scheme according to the LSA and have ac-cumulated entitlements under that old pension scheme, or any who have opted for the new pension scheme under the LPA but have retained entitlements from the old pension scheme, then the entity should still set up a retirement reserve fund supervisory committee in accordance with the LSA, and appropriate monthly contributions into its retirement reserve fund for the employees concerned.
However, because the old pension scheme does not apply to employees hired after 1 July 2005, or to previously hired employees who have opted for the new pension scheme and agreed to a cash-out payment of entitlements carried over from the old pension scheme, such employees have no interest in matters regarding payments from the business entity's retirement reserve fund. Therefore they should have no right to stand for election as the employee representatives on the entity's retirement reserve fund supervisory committee, or to vote in elections for such rep-resentatives.