A discussion of new regulations of Taiwan mandatory pension system
Date Issued
2006
Date
2006
Author(s)
LIN, KUAN-CHEN
DOI
zh-TW
Abstract
The purpose of this submission is to point out the potential flaws of previous pension system and to propose some practical solutions that may undo the problems: A) According to newly proposed labor pension regulations, individual retirement account and pension insurance contracts constitute the two, but competing, panels for the labor pension system. The former is, by design, the principal element of retirement resources and is solely control by the government. The structure of the new system may suffer serious government agency problem and can be overly conservative, and cause lower earnings replacement ratio, compared to other developed countries’; B) By definition, as pension system transform toward defined contribution, employees are the risk taker of the pension investment. According to previous plan design, except for insurance contracts, employees are not allowed to participate fund investment, nor do they have sufficient information of how the fund are invested or how to invest the fund; C) The renovation of regulations, still, hasn’t fully resolve the ‘black hole’ of the pension funds. The estimated insufficient contribution of pension is more than two million million. The changes of regulation or the promise of government doesn’t tell the whole story of how the end the pension crisis.
We suggest that the government should relinquish its role of pension investment and control to private assets investment entities. The relevant supervision and moderate penalty enforcements will be the key elements of the success of this transformation of privatization of pension funds. We propose three transit phases. First, a gradual decrease of government involvement on the pension funds, and establish of supervision system. Second, treat the insurance contracts as one of the ‘pension investment’, instead of a ‘pension panel’. Besides insurance contracts, government should encourage developments of moderate and privately operated investment objects, so that employees may have more portfolio choices based on their preference, occupation, and financial status. Third, return to the basic spirit of defined contribution plans: employees are the decision makers and risk takers. To avoid non-sophistication and over-optimistic investment of pension fund by individual investors, we propose that individual retirement account could be established in the various certified bank trusts. The bank trust should take the responsibility of education of the public at large, provide appropriate monthly investment checklists, and submit mandatory investment reports or other relevant disclosure to government agency.
Subjects
勞退新制
勞動基準法
pension system
Type
thesis
File(s)![Thumbnail Image]()
Loading...
Name
ntu-95-R92723034-1.pdf
Size
23.31 KB
Format
Adobe PDF
Checksum
(MD5):76876c792b3c3b00ad5ada0b8551fe5d