60% of Workers' Retirement Accounts Below $1 Million? Labor Groups Reveal Progress on Raising 6% Employer Contribution Rate: Retirement Savings of 7.78 Million at Risk

Wages and retirement funds have always been among the most pressing concerns for the public. The Labor Pension Act (new pension system) has been in effect for over 20 years. This year, the 'May 1 Action Alliance,' which organized the May Day labor parade, expanded its campaign under the theme 'Increase Retirement Benefits! Insure All Local and Migrant Workers,' presenting eight major demands, including a phased increase in the employer contribution rate to 12%. Tomorrow morning, the May 1 Action Alliance will hold a press conference at the Legislative Yuan's entrance titled '20 Years of the New System—Stuck at 6%! Retirement Savings of 7.78 Million Workers at Risk! Raising the Labor Pension Rate Cannot Wait Any Longer!' They will urge the ruling and opposition parties in the Legislative Yuan to swiftly review and pass the amendment to the Labor Pension Act, raising the employer's legally mandated minimum contribution rate and ending the 20-year freeze.

What is the new pension system? What are the labor groups demanding? After retirement, most employed workers in Taiwan receive two types of retirement funds: the 'old-age benefit' from labor insurance, and retirement funds under either the old or new pension systems. The so-called 'labor retirement' (lao tui) refers to the retirement savings account. The new labor pension system, implemented on July 1, 2005, has now been in place for over 20 years. According to the latest statistics from the Ministry of Labor, more than 13 million workers in Taiwan now have individual retirement accounts, and the majority of workers currently use this new system.

This year, the 'May 1 Action Alliance,' a coalition of labor unions and NGOs from across the country, presented eight major demands during the May Day labor parade:

- Gradually increase the employer contribution rate under the new pension system to 12% - Under the old pension system, provide two annual bases with no upper limit - Raise the wage brackets for labor insurance and labor pensions - Set the cap for severance pay under the new system at 15 months - Ensure full coverage under labor insurance and employment insurance - Include domestic workers and migrant workers in the labor pension system - Fully fund public servant and educator pension systems and return seniority compensation - Require both public and private schools to contribute 15% to retirement funds

What is Taiwan's employer contribution rate under the labor pension system? 20 years of stagnation disconnected from economic growth

The May 1 Action Alliance criticized in its press release that the employer's mandatory contribution rate under the new pension system 'has remained stuck at 6% for 20 years.' Over 20 years since the new system's implementation, nearly 7.78 million workers are now covered. At the outset, the government justified the freeze by saying 'first establish, then improve,' sacrificing workers' interests and saving employers massive retirement costs. Today, Taiwan's economic growth is undeniable. According to the latest forecast from the Directorate General of Budget, Accounting and Statistics, this year's (2026) GDP growth rate has been revised upward to 9.64%, the highest in 16 years. Additionally, the average annual increase in regular wages over the past five years has consistently remained high, between 2% and 3.1%, with a 3.09% increase in 2025—the highest in 26 years. However, these gains have only benefited capital owners and workers in extremely high-paying industries. Grassroots workers have not shared in this prosperity, and wage increases have been offset by inflation.

The 'May 1 Action Alliance' held a 'Labor Mass Parade' on Ketagalan Boulevard, presenting eight major demands. (Photo credit: Liu Weihong)

Progress on amending the Labor Pension Act? Over 10 legislative proposals from both ruling and opposition parties

The alliance pointed out that according to the Directorate General of Budget, Accounting and Statistics, as high as 70% (approximately 5.94 million) of Taiwan's grassroots workers earn actual wages below the average of NT$48,000. Under the current 6% contribution rate, as many as 60% of workers will accumulate less than NT$1 million in their retirement accounts after 25 years of work. The government, in effect, is shifting the risk of poverty in old age onto 70% of workers who earn below the average wage. Therefore, the alliance is calling for legislation to raise the employer contribution rate, ensuring grassroots workers achieve a sufficient replacement rate and narrowing class and wealth gaps. Regarding the current legislative status, the press release noted that over 10 versions of amendments to raise the employer contribution rate (amendment to Article 14 of the Labor Pension Act) have been proposed by both ruling and opposition parties. Whether the increase is immediate (to 9%) or gradual, the key issue is when the bill will be scheduled for review and passed.

Can workers under the old system also make voluntary contributions? Employer mandatory rate remains unchanged

The alliance emphasized that in upcoming local and national elections, slogans and 'number of proposed bills' must no longer be used to deceive workers—tangible progress is required. They also noted that although the Ministry of Labor has implemented measures such as 'allowing old-system workers to transfer to new-system retirement accounts,' the most critical issue—the employer's mandatory contribution rate—has yet to be addressed. Furthermore, the alliance argued that all workers, whether local or foreign, should be equally protected by law. Many workers in Taiwan, including both local and foreign nationals, are excluded from labor protections under the Labor Standards Act and thus cannot access retirement benefits. They urged the Legislative Yuan to prioritize the amendment to the Labor Pension Act during the current session and not delay it under pretexts such as 'assessing corporate adaptability.' Labor groups will continue to monitor the government and the Legislative Yuan to ensure the amendment passes, restoring dignity and security to the retirement lives of Taiwan's workers.

More exclusive reports from Feng Media: · Old pension system allows early settlement! Two major reforms take effect on the 17th—case calculation for a 55-year-old: 'NT$2 million continues to grow through investment' · Are you receiving less labor insurance pension? Over 30% of workers have wages 'legally underreported'—results of labor groups' advocacy revealed · Can you receive more labor insurance pension by 'waiving' it? New system for workers—case calculation shows eligibility for reinstatement under one condition · Labor insurance's hidden liabilities exceed NT$14 trillion—'When will it go bankrupt?' Public servant and educator pension status revealed, individual proposes two self-help measures