Amid pension fiasco, gov't posts stellar '13 results
By Ted Chen, The China Post
January 15, 2014, 12:05 am TWN
TAIPEI, Taiwan -- Amid growing scrutiny and political dissent over the government's retirement scheme, the Bureau of Labor Insurance (BLI) yesterday announced that the government's National Pension, Labor Insurance and Labor Pension funds have yielded stellar results over last year, generating profits of about NT$120 billion.
Most notably, the Labor Insurance fund posted a 6.35-percent return rate, an improvement over last year's 6.25 percent, reaping NT$30.4 billion in profits, representing a new record in recent years. About NT$20 billion worth of profits were reallocated to the Labor Insurance fund for continued investments. Paper profits however, declined slightly to NT$30.4 billion from the NT$31.3 billion recorded in 2012. At a 6.012-percent return rate, the Labor Pension fund last year generated income of NT$93.3 billion, the second highest figure seen in the fund's history.
In explaining the decline in profits despite a higher rate of return, the BLI stated that the funds last year were impacted by an inundation of retirees rushing to cash in on their benefits. Consequently, the funds lost NT$400 billion in invested capital, with the diminished portfolio scale preventing managers from performing optimally.
The BLI stated that over the course of last year, volatility in the global markets began diminishing toward the second half of the year, and that, coupled with the gradual recovery in the U.S. and European economies, allowed markets worldwide to begin rebounding in force. Capitalizing on the global improvement of market conditions, fund managers were able to yield stellar results over 2013, said the BLI.
Labor Pension Fund to Invest Extra NT$100 bil. in Local Shares
According to the BLI, the Labor Insurance fund is currently holding about NT$140 billion worth of stocks listed on the TAIEX, representing 26 percent of the fund. The bureau however, stated that managers this year will focus on investing in equities issued abroad, and that its portfolio of TAIEX stocks will be limited at around NT$10 billion.
Meanwhile, the Labor Pension fund last year reached a scale of NT$1.6 trillion, generating NT$93.36 billion in income, with rate of return at 6.012 percent, much higher than the 3.78 percent and 3.75 percent requirement of the current and previous iterations of the fund respectively. The BLI stated that an additional NT$100 billion will be allocated to the Labor Pension fund's portfolio of TAIEX stocks, while another NT$130 billion will be earmarked for seeking investment returns overseas.
The BLI stated that as markets worldwide reside at relatively higher benchmarks, investments will not commence until better opportunities appear.
In the past five years, the funds have recovered tremendous losses incurred during the 2009 financial crisis, and have accumulate net profits of NT$170 billion.