Will Retirement Pensions Increase? Labor Pension New System Implemented, Employer Contribution Rate to be Raised to '12%'? Labor Department Responds

The Labor Pension Act (Labor Pension New System) has maintained an employer minimum statutory contribution rate of 6% since its implementation in 2005. The Social Welfare and Environmental Hygiene Committee of the Legislative Yuan recently held a public hearing on 'Amendments to the Labor Pension New and Old Systems.' Scholars at the meeting pointed out that labor insurance has officially entered the 'death cross' stage, where insurance premiums exceed income, as of last year. The financial deficit is expected to widen with the approaching retirement wave. In response to pension reform, the president of the Taiwan Workers' Pension Alliance, He Zhengjia, put forward demands, pointing out that while the government encourages self-contribution to labor pensions, low-wage workers often cannot afford to do so and thus cannot enjoy tax benefits. Additionally, under the investment income distribution mechanism, high-wage workers end up gaining more benefits, which does not help achieve social redistribution. Therefore, labor unions advocate allowing old-system workers to choose the more favorable option and amending the new system, which has not been adjusted for 21 years, to raise the employer contribution rate from 6% to 12%. In response, Labor Department Deputy Minister Huang Lingna said that opinions vary on the adjustment of the employer contribution rate. The Labor Department has completed rough estimates and started internal discussions. Huang Lingna emphasized that raising the contribution rate and adjusting the tiered upper limit will directly affect more than 600,000 business units and 8 million applicable workers across Taiwan. The government will continue to communicate with labor unions and carefully consider the matter from multiple angles. Regarding some draft bills currently under consideration by the Legislative Yuan that propose differentiating employer contribution rates based on 'company size,' 'employee seniority,' or 'job level,' Professor Tsai Mingfang of the Department of Industrial Economics at Tamkang University bluntly stated that 'the logic is not reasonable' and raised two major potential concerns: 1. Differentiating by company size: Large enterprises already have relatively better salary treatment and working environments. If large enterprises are forced to apply a higher pension contribution rate, it may exacerbate the development of a 'K-type economy,' leading to more noticeable disparities in labor welfare between enterprises of different sizes. 2. Differentiating by employee seniority: Young workers generally have lower starting salaries. If the initial contribution rate is also low, it is unfair to young people. Moreover, industries with a higher proportion of senior employees are often those that young people are unwilling to enter and have lower profit margins. If their contribution pressure is suddenly increased, it may accelerate the collapse and exit of traditional industries, which may be detrimental to labor employment.