• Last updated:2021-10-18

Witnessing the giant step in the welfare of labor retirement, the New Labor Retirement Pension System is launching on July 1st.

One year after announcement of the Labor Retirement Pension Ordnance, finally, the New Labor Retirement Pension System will be officially launched on July 1st. It opens a new page in the protection of retirement welfare for labors in our nation.

In the past, the Basic Labor Law adopted the actual payment retirement pension system. Under this system, it is rather difficult for employers to calculate their costs; therefore, to dodge the personnel costs, many unethical employers layoff or retrench employees with various reasons. Due to which, labor disputes became common occurrences. Moreover, one of the main principles of the old system is long-term employment. It is highly difficult for a person to meet such requirement; therefore, ninety percent of worker retired without retirement pensions. It has become a great concern that the retired live of labors have not been well taken care of. As the population in the nation is aging and the industrial structure is changing in the fastest speed, improvement to the retirement pension system has become a matter with urgency.

The new labor retirement pension system, launching on July 1st, is a solution to solve the problems of the old system. The new retirement pension system adopts the assured contribution system. Workers are assured to receive their pensions without being affected by change of jobs or retrenchment. It is a comprehensive system that assures the security of labors' retired lives. Moreover, under the new system, the personnel cost will become the same for a corporation to hire young or middle-aged workers; therefore, mid/high age workers will no longer be the unwanted minority. In effect, the new retirement pension system will also become an effective mean to solve the problem of mid/high age unemployment.

Nonetheless, the possible increase in personnel costs for business operators and the counter-approaches possibly adopted by business owners has also become a highly concerned issue. In fact, when laying out employers' responsibilities for contribution in the new retirement pension system, the legislature has proposed many solutions to guard the freedom and flexibility of corporations. Solutions have been made to ensure that businesses in Taiwan will not be burdened by excessive levies.

The new retirement pension system adopts the assured contribution system. Employers' responsibilities are clearly laid out; therefore, cost management has been made easier. With the same contribution rate for all workers, continuous employment of experience workers becomes advantageous for employers. Long term wise, it is highly helpful to the health and safety of a corporation.

Contrary, if an employer forces pay-cuts, retrenchment, or layoffs just to save the retirement costs at present, the retrenchment, recruitment, and training costs will be even higher than the small sum he/she save right now, as well retirement pension contributions for new recruits are still unavoidable. Therefore, long-term wise, unethical attempts will not reduce personnel costs for any company; in contrary, such conducts will only break the trust of employees, affect employees' morale, and lower the company's competitiveness.

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• Source:Department of Standards and Equal Employment
• Publication Date:2005-10-25
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