Since the promulgation of the Basic Labor Standards Law (BLSL) in Taiwan on 30th July, 1984, employers in the Covered Sector have been required to pay a retirement pension to workers if they can fulfil the age and length of service requirements which are laid down in the law. Employers are, therefore, required to allocate a certain amount of money each month towards the workers’ retirement reserve.
The purpose of this study is threefold. The first purpose is to conduct a survey among private firms in order to understand the impact of the pension fund contribution on the labor market in Taiwan. Secondly, by using the actuarial principle of developing a formula which is capable of calculating the proper pension fund contribution rate for each firm, such factors as age, the length of service, the wage structure, the labor turnover rate, the wage growth rate, and the interest rate can be taken into consideration. Finally, this study also critically reviews the pension system which is specified by the BLSL, and an alternative system which can remedy the current system’s shortcomings is also proposed.
In addition to the above-mentioned framework, in this study a Fortran computer program to calculate the contribution rate for the pension fund is included, as well as service tables which can reflect the labor turnover rate for each industry in the sectors covered by the BLSL.
