History

The Regulations are prescribed in accordance with Paragraph 3 to Article 56 of the Labor Standards Act.

The competent authority of the Labor Retirement Fund (here-in-after referred to as the Fund) is the Council of Labor Affairs, Executive Yuan.

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 other financial institutions.
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 (here-in-after referred to as the Supervisory Committee) for review and record.

Sources of the Fund are as follows:
1.The labor retirement reserve fund allocated by all business entities in accordance with Paragraph 1 to Article 56 of the Labor Standards Act.
2.Fines collected in accordance with Paragraph 1 to Article 50 of the Labor Pension Act.
3.Profits accrued from interest or utilization of the Fund.
4.Other revenues allocated with government approval.

The scope of expenditures of the Fund shall be limited to the payment of the labor pension and severance payment given to employees upon the termination of business entities in accordance with Article 8 of the Regulations for the Allocation and Management of the Labor Retirement Reserve Fund.

The scope of utilization for the Fund is as follows:
1.Deposit in domestic or foreign financial institutions.
2.Loan to governments at various levels or state-owned enterprises for undertaking economic construction or investment expenditures with compensation or repayable by budgeting on a year-by-year basis.
3.Investment in domestic or foreign listed, over-the-counter, or private placement equity securities.
4.Investment in domestic or foreign debt securities. If the Fund invests in foreign debt securities, it shall invest only in debt securities guaranteed or issued by a country or institution with a credit rating levels at least A, assigned by internationally prestigious credit rating organizations or approved by the competent authority of securities.
5.Investment in publicly or privately placing beneficiary certificates issued by domestic securities investment trust funds, futures trust fund, mutual trust funds or collective trust products.
6.Investment in beneficiary certificates, fund shares or investment unit securities issued or managed by foreign fund management institutions.
7.Investment in domestic or foreign real estate securitization products.
8.Investment in domestic or foreign spot commodities.
9.Engaging in domestic or foreign financial derivatives.
10.Engaging in securities lending.
11.Other items beneficial to the return of the Fund examined by the Supervisory Committee and reported to and approved by the competent authority.
The domestic investment ratio referred to in Subparagraph 3 and Subparagraph 5 of the preceding paragraph may not exceed forty percent of the Fund's net value.
If the scope of utilization referred to in Paragraph 1 involves the foreign exchange deposit and overseas investment, the ratio may not exceed forty percent of the Fund's net value.
If the scope of utilization referred to in Paragraph 1 involves the Mainland China area, Hong Kong, or Macao, such items shall comply with statutes and regulations of financial competent authorities and other relevant agencies.

Investment of the Fund in foreign currency deposits shall follow the following stipulations:
1.Deposits may be in banks that are located in the Republic of China or overseas branch institutions of domestic banks.
2.The banks 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 competent authorities of finance.
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 foresaid amount.

(Deleted)

The Fund when investing in foreign securities shall follow the following investment ratio restrictions:
1.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.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.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 complied.

For the investment in foreign derivatives, it shall trade via financial institutions approved by the competent authority of finance, securities or futures of 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 complied:
1.In view need to hedge N.T. 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 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 competent authority of securities or futures 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 the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statement shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.
When the gains from the utilization of the Fund 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 exceed six percent of the net value of the Fund by 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 incomes of utilization referred to 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 utilization of the Fund then calculated. If the foresaid 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 by 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 situations of revenues, expenditures, and utilization of the Fund to the Supervisory Committee on a monthly basis, and the Supervisory Committee shall report to the competent authority for review and record.

The Supervisory Committee shall report the budget and final financial settlement of revenues and expenditures for the Fund to the competent authority for review and record.
In order to process matters concerning the accounting of the Fund, an accounting system shall be established.

The Regulations shall become effective on the date of promulgation.