TAIWAN - With the Labour Pension Act (LPA) set to come into force in just four months, many multinationals have begun preparing for implementation ahead of forthcoming detail, a survey by Watson Wyatt has found.
The Executive Yuan of Taiwan ratified the enforcement rules under the LPA in December last year, however Watson Wyatt says many issues remain unanswered, namely those covering tax treatment and fund management.
A recent survey by the consultant found companies intend to integrate the LPA with current supplementary benefits; are unlikely to buy-out past service; and are unlikely to offer an annuity insurance option.
According to Watson Wyatt, 50% of the companies surveyed currently provide an early vesting benefit in addition to the Labor Standards Law (LSL) minimum. Of these, 46.1% may continue to provide such supplementary benefits, integrating them with the LPA.
Some 30.3% may freeze future supplementary accruals for LPA staff, while only 10.5% will continue the current leaving service benefit in addition to the LPA. A further 10.5% will stop current benefits for all staff but replace it with a new benefit.
“These responses suggest that those companies that have previously provided benefits in addition to minimum LSL requirements still see the value in providing a supplementary benefit,” Watson Wyatt said. “However, such supplementary benefits are now likely to be integrated with the LPA to avoid duplication and control cost.”
The LPA offers an option to settle LSL obligations earned prior to the LPA by buying-out the liabilities with a single payment to LPA fund accounts. According to the survey, 68.6% of companies are not likely to adopt this option, 27.9% will consider it and 3.5% were likely to adopt it.
Another option under the LPA, for companies with more than 200 employees, is to provide a private annuity insurance product in addition to the LPA account enrolment. Watson Wyatt said 40.1% of companies responded they are not likely to offer this additional benefit while another 40.1% are unable to because their headcount is less than 200.
Watson Wyatt noted no tax rulings have yet been issued ahead of implementation of the LPA covering issues such as the maximum LPA deductible employer contributions, the tax treatment of service buy-out payments and the tax deductibility of future contributions in respect of LSL benefits.
Employer contributions, which will be no less than 6% of capped pay, and employee contributions, which are no more than 6% of capped pay, are expected to be tax deductible. The LPA takes effect on July 1, 2005.
The Pensions Regulator (TPR) and Labour MP Stephen Kinnock and will listen to the experiences of steelworkers when transferring their pensions away from the British Steel Pension Scheme (BSPS) next week in Port Talbot.
Just Group has acquired a 75% stake in the holding company of Corinthian Pension Consulting in a bid to strengthen its professional defined benefit (DB) advisory services.
The Pensions Regulator (TPR) has exercised its production order power under the Proceeds of Crime Act 2002 for the very first time as part of a fraud investigation.
The ITN Limited Pension Scheme has named Trafalgar House as its administrator for an initial term of five years.