Labor Insurance Fund has decided to funnel over NT$100 billion into the domestic and overseas stock markets in the second half of the year, a top commission official said yesterday. Lee Jui-chu, vice chairwoman of the supervisory commission, said that spiraling prices for international crude oil and raw agricultural and industrial materials have resulted in import-induced inflation pressure on domestic commodity prices.
Lee cited projections by the Cabinet-level Directorate General of Budget, Accounting and Statistics as indicating that Taiwan's consumer price index would post an annual surge of 3.29 percent, while the wholesale price index would experience a much higher annual growth of 4.93 percent, as a result of the import-generated inflationary pressure.
As of the end of June, the labor retirement pension fund under the new retirement system sat at around NT$260 billion, and the corresponding fund under the old labor retirement system came to NT$460 billion, according to statistics compiled by the supervisory commission.
As both kinds of funds are growing steadily, the supervisory commission will work out a better investment plan for the funds, so as to effectively mitigate the impact of inflation, according to Lee.
She said that her supervisory commission will appropriate NT$50 billion to NT$60 billion from each of the two kinds of labor insurance funds for securities investments at home and abroad.
The supervisory was inaugurated in July 2007, and started two months later to funnel part of the labor insurance funds collected under the new labor retirement pension system into stock markets. But affected by the lingering bearish performances of global stock markets, the investment return rates for the new-system labor insurance fund have fallen into negative territory for most of the past six months of the year, Lee continued.
Nevertheless, Lee said, the medium- to long-term investment return prospects remain bright, although the short-term investment performance might leave much to be desired.
At the moment, some 40 percent of labor insurance funds are invested in equity-based securities products, and 60 percent in financial products offering fixed investment gains, such as deposits.
Over the past six years, labor insurance funds collected under the old labor retirement pension system managed to score an average annual earnings of 9.18 percent from investment in local bourse and certificates of beneficiaries, and 5.8 percent from overseas investments, according to tallies released by the supervisory commission.
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