History

These Regulations are determined pursuant to Article 56, Paragraph 3 of the Labor Standards Act.

The Council of Labor Affairs of the Executive Yuan shall preside as the competent authority of the Fund.

The competent authority, in conjunction with the Ministry of Finance, shall commission the Bank of Taiwan to manage the revenues, expenditures, safeguard, and utilization of the Fund, where the safeguard and utilization of the Fund may be commissioned to another financial institution.
The Bank of Taiwan may commission another financial institution to manage the revenues and expenditures, and safeguard of the Fund; such a commissioning contract shall be sent to the Labor Pension Fund Supervisory Committee (hereafter referred to as the Supervisory Committee) for future reference.

The Fund's income sources are as follows:
1.The labor retirement reserve funds allocated by all business entities in compliance with Article 56, Paragraph 1 of the Labor Standards Act.
2.Fines collected pursuant to Article 50, Paragraph 1 of the Labor Pension Act.
3.The money accrued from interest or through investment by the Fund.
4. Other monies allocated with government approval.

The scope of expenditures from the Fund shall be limited to the payment of the labor pensions and severance payments given to labor upon the termination of business entities pursuant to Article 8 of the Regulations for the Allocation and Management of the Labor Retirement Reserve Funds.

The scope of Fund utilization shall be as follows:
1. Deposit in financial institutions.
2. As loans to various levels of governments or public enterprises or organizations for the purposes of economic development or investment; reimbursements may come either from the profits or through annual budgetary repayments.
3. Purchase of the stocks of listed or OTC-traded companies, the beneficiary certificates of securities investment trust funds, or futures trust fund, or subscription to the seasoned equity offerings of listed or OTC-traded companies, or the underwritten stocks of initially listed or OTC-traded companies.
4. Purchase of government, financial, or corporate bonds.
5. Purchase of short-term bills.
6. Investment in foreign currency deposits ,foreign securities, or foreign derivative financial products.
7. Other utilization items beneficial to Fund's revenue, and which are subject to approval by the Supervisory Committee and permission by the Executive Yuan.
The amount utilized as in Subparagraph 3 of the foregoing may not exceed forty percent of the Fund's net asset value.
The amount utilized as in Subparagraph 6 of Paragraph 1 may not exceed twenty percent of the Fund's net asset value.

The Fund's investment in foreign currency deposits shall be implemented in accordance with the following regulations:
1. Deposits may be in banks that are located in the Republic of China or overseas branch institutions of domestic banks.
2. The bank shall rank among the top three hundred of all the banks in the world in terms of assets or capital, or have credit rating at a certain level by an internationally prestigious rating agency or a rating agency approved by the financial competent authorities.
3. The amount of foreign currency deposits in one single domestic or foreign financial institution shall not exceed one percent of the Fund's net value. However, demand deposits in the Fund's custodian bank and the overseas discretionary investment account shall not be included the calculation of the foregoing amount.

The Fund shall invest only in the following types of foreign securities:
1. Stocks, exchange traded funds or depositary receipts traded on foreign centralized securities exchange market or over-the-counter exchange.
2. Bonds guaranteed or issued by a country or institution with a credit rating levels at least A, assigned by international credit rating organizations that is internationally prominent or approved by the financial competent authorities.
3. Offshore funds approved or reported as valid by the Financial Supervisory Commission, Executive Yuan and raised and sold within the Republic of China.
If any of the utilization items in any item of the foregoing paragraph involve the Mainland China area, Hong Kong, or Macao, such items shall comply with the laws and regulations of the financial competent authority and other relevant agencies.

The following investment ratio restrictions shall be upheld when the Fund invests in foreign securities:
1. The total capital of purchasing any single foreign stock, bond, exchange-traded fund, or offshore fund shall not exceed one percent of the Fund's net value at the time of the investment.
2. The total amount of investment in any foreign stock or bond shall not exceed ten percent of the total amount of issuance of that stock or bond.
3. The total investment in any exchange-traded fund or offshore fund shall not exceed ten percent of the value of beneficiary certificates issued by that fund.
4. In the case of investment in depositary receipts, the investment ratio should be calculated by adding the amount of shares represented by such depositary receipts to the amount of invested shares of the company issuing such depositary receipts. When calculating the maximum investment ratio, the requirements of subparagraph 1 and 2 shall be observed.

For the investment in foreign derivatives, it shall trade via a financial institution approved by the competent financial, securities, or futures authorities of the foreign countries. Apart from principal guaranteed products, derivatives trading shall, as a rule, not increase the Fund's financial leverage, and the following requirements shall be observed:
1.In view need to hedge NT dollar and foreign currency exchange rates when making foreign investments, the Fund may engage in trading in foreign exchange derivatives within the amount limits and scope of tools prescribed by the Central Bank of the Republic of China(Taiwan) in relevant regulations.
2. Trading in non-foreign exchange derivatives may be conducted within the scope of futures trading contracts floated on a stock exchange or over-the-counter market approved by the securities or futures competent authority of the country in question.
The Supervisory Committee shall determine limits, counterparties, and risk management measures when the Fund engages in derivatives transactions and shall request the approval of the competent authority.

With regard to utilization of the Fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.
When the gain from Fund utilization minus the final valued unrealized gains from investment and after making up accumulated shortfalls for the previous two years exceeds earnings calculated using the two-year time deposits interest rate offered by local banks, one half of the surplus shall be fully distributed within three months after the issuance of annual final financial statement; however, the distribution shall be restricted to the unsettled reverse accounts of the Fund at the time of distribution. All income from Fund investment remaining after distribution shall be stated as accumulated surplus.
If total realized gains within the stated accumulated surplus exceeds six percent of the net value of the Fund at the end of December of that year, it shall be fully distributed within three months after the issuance of the annual final financial statement.
With regard to the utilization income in Paragraph 2, the final valued unrealized price fall losses from investment in stocks and beneficiary certificates shall be subtracted, and the minimum earnings from the Fund utilization then calculated. If the foregoing minimum earnings are less than earnings calculated using the two-year time deposits interest rate offered by local banks, the deficit shall be covered by the accumulated surplus. If the surplus is inadequate to cover the deficit, it can be covered by the surplus of the next year. However, the duration for this type of coverage is only limited to two years. In case that the deficit is still inadequate to cover the surplus, Treasury Funds can be used to cover the deficits after the approval of the competent authority.

The Bank of Taiwan shall execute all duties pertinent to the revenues and expenditures of the Fund in accordance with the stipulated procedures, and shall report the state of Fund revenue, expenditure, and utilization to the competent authority for future reference on a monthly basis after reporting to and obtaining the approval of the Supervisory Committee.

The Supervisory Committee shall report the Fund's revenue and expenditure budgets and final financial statements to the competent authority for future reference.
In order to handle matters concerning accounting of the Fund, an accounting system shall be established.

These Regulations shall take effect on the date of promulgation.