New pension system rules likely this year: FSC
By John Liu ,The China PostTAIPEI, Taiwan -- Regulations governing a new pension system are expected to be rolled out by the end of the year, allowing individuals to choose their own investment plans for their pensions, officials at the Financial Supervisory Commission (FSC) said yesterday.
September 20, 2013, 12:21 am TWN
The FSC has been collaborating with the Council of Labor Affairs (CLA) to establish a new system which will incentivize participants to increase the proportion of earnings that they deposit into the pension fund.
The FSC hopes that with the new system, half of the workforce in the nation will voluntarily allocate part of their earnings into the pension fund. The FSC aims to accumulate NT$60 billion in the fund.
The new pension system has been preliminarily set up, the FSC said, adding that regulations governing the new system would be rolled out before the end of the year. A consensus between the CLA and FSC has been reached, and amendment proposals to Labor Pension Act are expected to be submitted to the Legislature later this year.
A Platform that Allows Different Options
Under the new system, people may plan their pension by choosing between various insurance policies and mutual fund investments. People may choose mutual funds based on their ages and investment preferences. Mutual funds are categorized into target fund, lifecycle fund, active fund, conservative fund and balanced fund.
The FSC will also announce guidelines stipulating which financial institutions will be eligible to participate in the new pension system. The FSC will set up criteria in terms of capital requirement, capability to fulfill debt payment, fund management experience, past financial records, etc.
Allocating part of the earnings into the pension can save on taxes. In order to add more incentive, the government hopes to increase the proportion of earnings that people may allocate into pension fund. However, the FSC might have to cooperate with the Ministry of Finance to work out the details.
To be Launched Later in 2014
Players in the financial industry said that past experiences show that with amendment to the regulation to be reviewed by the Legislature and considering the time it takes to establish a new mechanism, the new pension system is expected to be launched in the latter half of 2014 the earliest.
The government-run labor pension and insurance funds posted record high earnings in July, reaching NT$7.3 billion for the labor insurance fund, while the labor pension fund netted NT$19.09 billion in gains.
In the first seven months of this year, the labor insurance fund accumulated profits of NT$15.74 billion, with the labor pension fund accumulating profits of NT$46.42 billion.