Cabinet sets higher labor insurance premium
By Ann Yu,The China PostTAIPEI, Taiwan -- Vice Premier Jiang Yi-huah announced the Cabinet's version of the new labor insurance program yesterday, detailing a higher premium rate and lower income replacement rate. The adjustments include hiking premium rates as much as 10 percent over the next 20 years, cutting income replacement rates by 8 to 11 percent, and enhancing the labor insurance fund's performance in finance markets. The maximum qualified salary for insurance coverage will be maintained at NT$43,900.
January 31, 2013, 12:06 am TWN
Council of Labor Affairs (CLA) Minister Pan Shih-wei said that the salary cap will be unchanged to ensure the fund's stability by avoiding high-income retirees claiming too many portion of the funds.
In addition, the original maximum monthly salary used in the formula to calculate monthly pensions will be adjusted to the average of a person's 180 biggest monthly paychecks, up from the 60 biggest.
As for the finance losses in the labor insurance funds, Vice Premier Jiang Yi-huah said that the government will provide NT$20 billion in compensation for the first year after the proposed reform is implemented.“Future compensation will depend on the government's financial situation, but the standard should stand at NT$20 billion.”
Income Replacement Rate Drops Between 8 to 11%
The income replacement rate is the percentage of pre-retirement monthly income that is handed out in pensions every month. In Taiwan's case, the income replacement rate is calculated by multiplying a percentage base of 1.55 percent with a worker's years of service. If a worker paid into the labor insurance program for 26 years, his income replacement rate would amount to nearly 40 percent.
This system means that “a worker's income replacement rate is actually influenced by the years of service and not their average income,” Jiang said.
In this undated photo, construction workers assemble wooden boards for a project. Council of Labor Affairs Minister Pan Shih-wei announced that the labor insurance program's ...
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