Taipei urged not to change pension investment rules
By Shelley Shan / Staff Reporter
The government should not change regulations governing workers’ pension funds to allow workers to choose their own investment goals, workers’ rights advocates said at a news conference in Taipei yesterday.
“We urge the Department of Labor to maintain its position on the matter and resist lobbying by securities firms, who covet this big cow. [labor pension funds] for years,” Taiwan Labor Front General Secretary Son Yu-liam (孫友聯) said, adding that the group also plans to ask lawmakers to resist change.
At the center of the problem is the state-run labor pension fund, which has accumulated around NT$3.1 trillion ($105 billion) since the government introduced a new pension fund scheme. which obliges employers to co-finance employees’ pension funds.
Article 14 of the Labor Pension Law (勞工退休金條例) stipulates that employers must deposit a monthly amount of at least 6% of a worker’s monthly salary into the worker’s pension fund account, and that a worker can voluntarily deposit pension funds up to 6% of their monthly salary.
The pension paid voluntarily is not included in the tax on annual wages.
Article 32 of the Labor Pension Fund Law Enforcement Rules (勞工退休金條例施行細則) stipulates that the cumulative returns of pension funds shall not be less than the average bank interest rate for two-year savings deposits.
Of the 7.24 million workers who signed up for the new workers’ pension scheme, only about 830,000 people chose to have a fixed percentage of their wages deducted to save in retirement fund accounts, according to statistics from the Bureau of Labor Insurance.
The average monthly salary of workers who voluntarily pay for their pension funds was about NT$63,655, according to bureau statistics.
In contrast, the average salary of all workers who opted for the new pension scheme was around NT$42,253, according to the data.
“It shows that people who have well-paying jobs and have extra money to put aside would voluntarily pay for their pension funds,” Son said. “If these people had the right to choose their own investment goals, in addition to tax relief and government-guaranteed investment returns, it would lead to an inverse distribution of social income.”
Securities firms have sought to boost the market by drawing funds from the workers’ pension fund, which is risky, he said.
“They also tried to sway public opinion through the media by accusing the government of inefficient management of the Workers’ Pension Fund,” Son said. “The truth is that the Bureau of Labor Funds can manage the workers’ pension fund as well as private fund managers. The lies about the mismanagement of the fund by the government should stop.
Securities investment companies can attract customers to their financial products by offering high investment returns and zero processing fees, instead of trying to dip into the state-run pension fund, a- he declared.
Of the NT$3.1 trillion in the workers’ pension fund, about 13 percent is managed by private companies, said Taiwan Labor and Social Policy Research Association director-general Chang Feng- yi (張烽益), adding that their management fees exceeded NT$1 billion last year.
“These companies keep telling people how corrupt government officials are and the benefits of letting people choose their own investment targets,” Chang said.
“However, it is easier to convict a corrupt official than a private fund manager accused of insider trading or breach of trust. The fact that private investment firms run the pension fund is no guarantee that it would be problem-free as they claim,” Chang said.
Taiwan Federation of Financial Unions general secretary Han Shih-hsien (韓仕賢) said the new pension fund scheme aims to ensure workers can maintain a basic standard of living when they retire. , and that the objective of managing the pension fund is to ensure that it grows “in a stable and conservative manner”.
“We should not make rash and risky investment decisions just to increase pension fund returns because banks will not compensate pensioners for investing in high-risk financial products,” he said. declared.
The government should ensure that the fund is protected from the impacts of a global financial crisis or a pandemic, Han added.
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