On June 11, 2004, the Labor Pension Act was passed by the Legislative Yuan, enacted by presidential order on June 30, 2004 and put into effect as of July 1, 2005. Features of the pension scheme include:
- Transferability: As the new pension scheme employs a personal pension account mechanism, pension funds in an employee's account are unaffected by job changes, business shutdowns or closures.
- Post-retirement income from annuity benefit: The pensions under personal pension account mechanism and annuity insurance scheme are all paid by annuity that provides a guarantee of post-retirement financial support.
- Coexistence of new and old pension schemes: Employees can choose to continue with the old pension scheme or to switch to the new one. For employees who continue with the old one, their pension will not decrease; for those who choose the new scheme, their seniority will be maintained. When retirement conditions are met, their pension will be calculated in accordance with the Labor Standards Law.
- Broadened coverage: Self-employed persons who perform actual labor and commissioned managers or domestic employees who are not covered by the Labor Standards Law may voluntarily enroll in the new pension scheme.
- Predictable operating cost for employers: The new pension scheme enables employers to more easily estimate labor costs and reduces disputes resulting from lay-offs or dismissals to avoid pension payments.
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