New law opens labor pension fund to investment

March 21, 2007

A recently-passed law will allow for a portion of labor pension funds managed by the government to be invested in the local and international stock markets and in other financial instruments.

The law authorizes the Council of Labor Affairs (CLA) to form a committee to supervise investments made by the government's labor pension fund, which was formed in 2005.

The new legislation will likely take effect in July. Since the new pension fund system was started last year, 4.29 million people have joined the fund, or 76.82% of the workers eligible under the Basic Labor Law.  As of Feb. 9, the scope of the Labor Pension Fund reached NTD 140.71 billion, and is increasing at an estimated NTD 8 billion per month.

The CLA says that by opening the fund to investment, the number of people paying into the fund should rise. The council says that it expects the funds to raise the annual returns on the funds to 4% from the current 2% gained from interest deposits at banks.

In response to the new legislation, the Securities Investment Trust and Consulting Association released a statement calling on the government to request that international assets management companies form partnerships with their Taiwan counterparts in order to share their talent and expertise in the field.

The labor pension fund joins four other government funds that are allowed to invest in local equity markets, including the Postal Savings Fund and the Labor Insurance Fund.

(Economic Daily News, Taipei Times)

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