History

These Regulations are enacted in accordance with Paragraph 1 of Article 33 of the Labor Pension Act (the "Act").

The competent authority of the pension fund under the Labor Pension Act (the "Fund") shall be the Council of Labor Affairs, Executive Yuan.

Except the late payment charge which shall be handled in accordance with Paragraph 2 below, the scope of payment of the Fund shall be as follows:
I. The pension payment or the balance payment payable to employees, employees' survivors or designated persons according to Paragraph 1 of Article 24, Article 26 of the Act and Article 36 of the Implementation Rules of the Act;
II. The principal and returns to be transferred to the annuity insurance in a lump sum by employees in accordance with Paragraph 1 of Article 14 of the Implementation Rules of the Act; and
III. The administrative costs of the Fund investment/utilization and Labor Pension Fund Supervisory Committee (the "Supervisory Committee") required for auditing and performance administration.
IV. Other relevant necessary expenditures.
The scope of payment of the late payment charge collected by the Fund shall be as follows:
I. to pay the difference to be covered by the national treasury in accordance with Paragraph 2 of Article 23 of the Act, if the return of the Fund is less than the return calculated based on the average interest rate of 2-year-term time deposit of the local banks;
II. to pay the difference between the guaranteed return calculated in accordance with Paragraph 2 of Article 11 and the return calculated in accordance with Article 8;
III. to pay other items reported to and approved by the Executive Yuan.
The administrative costs referred to in Sub-paragraphs III and IV of Paragraph 1 shall be budgeted by the Supervisory Committee based on the size and operation performance of the Fund and submitted to the competent authority for approval.

The scope of utilization of the Fund shall be as follows:
I. deposit in domestic or foreign financial institutions;
II. loan to government agencies in various levels or state-owned enterprises for undertaking economic construction or capital expenditure with compensation or repayable by budgeting on a year-by-year basis;
III. extension to financial institutions for offering labor housing loans;
IV. investment in domestic or foreign listed, over-the-counter, or privately raised equity securities and their financial derivative products;
V. investment in domestic or foreign listed, over-the-counter or privately raised debt securities and their financial derivative products;
VI. investment in publicly or privately raised beneficiary certificates issued by domestic securities investment trust funds, beneficiary securities issued by domestic mutual trust funds or collective trust products;
VII. investment in beneficiary certificates, fund stocks or investment unit securities issued or managed by foreign funds management institutions (the "Foreign Funds");
VIII. investment in domestic/foreign current commodities and their financial derivative products;
IX. investment in domestic/foreign real estate, or the beneficiary certificates of real estate investment trust or assets trust and their financial derivative products;
X. investment in other financial derivative products;
XI. engaging in securities lending;
XII. other utilization items beneficial to the return of the Fund examined by the Supervisory Committee and reported to and approved by the competent authority.
If the utilization items referred to in the preceding sub-paragraphs involve mainland China or Hong Kong or Macao, the relevant laws and regulations prescribed by the financial competent authority and other relevant authorities shall be complied with.
For the assets allocation ratio of the utilization items referred to in Paragraph 1, the Supervisory Committee shall prepare an annual plan for investment/utilization to be submitted to the competent authority for recordation.
In relation to the investment/utilization of the Fund, the Supervisory Committee shall prescribe rules for relevant utilizations and transactions and processing/handling procedures to be submitted to the competent authority for recordation.

Investment in securities by the Fund shall comply with the following investment ratio restrictions:
I. The total cost for purchase of any single equity securities, debt securities or funds shall not be more than 2% of the net worth of the Fund at the time of investment;
II. The total amount for the investment in any equity securities or debt securities shall not be more than 10% of the total issued amount of such securities;
III. The total amount for investment in any fund shall not be more than 10% of the issued and outstanding beneficiary units of such fund;
IV. The investment in depositary receipts and the shares issued by the issuer of such depositary receipts held by the Fund shall be combined for the purpose of calculating the total amount or total number, and the ceiling of the investment ratio shall be calculated in accordance with Sub-paragraph 1 and Sub-paragraph 2 above. The number of the depositary receipts shall be calculated based on the number of shares represented by such depositary receipts.

Investment in financial derivative products by the Fund shall be handled in accordance with the following rules:
I. Except for principal-guaranteed-typed products, investment shall not increase the financial leverage of the Fund in principle;
II. To accommodate the needs for the exchange hedge between NT$ and foreign currencies in relation to foreign investment, the Fund may be invested in the foreign exchange financial derivative products within the amount limits and the product scopes under relevant rules prescribed by the Central Bank of China;
III. Engagement in securities-related financial derivative products shall be processed through the futures firms approved by the securities and futures authorities of the countries concerned, and the scope shall be the futures contracts published or quoted by the securities and futures authorities, securities exchanges or over-the-counter market of the countries concerned.
The trading limit, trading counterpart and risk management measures of the financial derivative products invested by the Fund shall be drafted by the Supervisory Committee and submitted to the competent authority for approval.

The foreign currency deposits which the Fund deposits in domestic and foreign financial institutions shall be processed as follows:
I. Deposit shall be made with the banks ranked among top 300 in terms of global bank assets or capital, or with the banks having certain specific rating rated by a credit rating institution that is internationally renowned or its operation has been approved by the competent authority; and
II. The amount of deposit in any single bank shall not be more than 1% of the net value of the Fund, provided that the portion outsourced to foreign institutions shall not be included in the said amount.
The rank, rating referred to in Sub-paragraph I of the preceding paragraph and the amount of deposit ceiling shall be prescribed by the Supervisory Committee and submitted to the competent authority for recordation.

The record date for profit/loss allocation of the Fund (the "Record Date") shall be December 31 of each year. Within three (3) months after the Record Date of each year, the Bureau of Labor Insurance (the "Bureau") shall handle profit/loss allocation.
The profit/loss allocation referred to in the preceding paragraph shall be made based on the amount derived from multiplying the profit/loss of the Fund in the current year by the cumulative amount of the daily balance in the individual labor pension account in the current year, divided by the accumulated amount of daily balance of the Fund in the current year.
The amount referred to in the preceding paragraph shall be calculated by the dollar and rounded to the nearest dime.
The Supervisory Committee shall, within two (2) months after the Record Date of each year, notify the Bureau of the profit/loss of the Fund in the current year.

When an employee or his/her survivor(s) or designated person(s) applies for pension payment, if the amount distributed in accordance with the preceding article is less than the return calculated based on the average interest rate of 2-year-term time deposit of the local banks during the deposit period, payment of the return calculated based on the said average interest rate of 2-year-term time deposit of the local banks shall be made.
The return calculated based on the average interest rate of 2-year-term time deposit of the local banks as referred to in the preceding paragraph shall be based on the average annual interest rate calculated based on the minimum guaranteed monthly return published by the Supervisory Committee and calculated at simple interest rate.
The average annual interest rate provided in the preceding paragraph shall be rounded to the fourth decimal place.
The return distributed under Paragraph 1 shall be calculated by the dollar and rounded to the nearest dime.

The accumulated amounts in the individual labor pension accounts and the amount calculated and distributed in accordance with Article 8 shall be disclosed in the individual labor pension accounts.
Disclosure of the amount calculated and distributed in accordance with Article 8 referred to in the preceding paragraph shall be implemented from March 31, 2007.

Where an employee chooses to transfer in a lump sum the principal and returns accrued in his/her individual pension fund account to the annuity insurance in accordance with Paragraph 1 of Article 14 of the Implementation Rules of the Act, except for the return already distributed to the said account, the undistributed return shall be calculated up to the month of application based on the criteria for distributing return applied in the previous term.
Where the return referred to in the preceding paragraph is less than the average interest rate of 2-year-term time deposit of the local banks during the deposit period, calculation shall be made based on such average interest rate of 2-year-term time deposit.
Where undistributed return has been calculated for the employee based on the criteria for distributing return applied in the previous term in accordance with Article 34 of the Implementation Rules of the Act and the preceding paragraph, the difference of profit/loss allocation between the current term and the previous term shall not be re-distributed or withdrawn upon profit/loss allocation of the current term.

With respect to the return to be received by an employee in accordance with Paragraph 2 of Article 36 of the Implementation Rules of the Act, except for the return which has been distributed to the pension account, the undistributed return shall be calculated up to the month of application based on the criteria for distributing return applied in the previous term.
Where the return referred to in the preceding paragraph is less than the average interest rate of 2-year-term time deposit of the local banks during the deposit period, calculation shall be made based on such average interest rate of 2-year-term time deposit.

For the collection, payment and custody of the Fund, the Bureau shall prescribe relevant operational rules and submit same to the competent authority for approval.

The Bureau shall submit the amounts of collection and payment of the labor pension fund and the accumulated amount to the Supervisory Committee for examination and to the competent authority for recordation on a monthly basis.
The Supervisory Committee shall report the utilization of the Fund to the competent authority for recordation on a monthly basis.

The Supervisory Committee shall submit the budget and final account of the collection and payment of the Fund to the competent authority for recordation.
The Supervisory Committee shall establish the accounting system for processing the accounting affairs of the Fund.

Unless another date of implementation is separately prescribed, these Rules shall come into effect on July 1, 2005.