Overview of Government Pension Systems in Taiwan: Labor Pension & National Pension

Del Sol CPA
2 days ago
3 min read

In Taiwan, there are several pension options available for retirees. These are primarily social insurance programs designed to provide financial support after retirement. The three main types of pensions you can receive upon retirement in Taiwan are:

Labor Pension (勞工退休金)

The Labor Pension is a mandatory retirement savings system for employees, introduced under the Labor Pension Act (勞工退休金條例). It applies to employees covered under the Labor Standards Act (勞動基準法). The system is designed to ensure that employers provide retirement benefits for their employees.

Key Points:

Mandatory for Employers: Employers are required to contribute to the Labor Pension system for their employees. The contribution is typically 6% of the employee’s monthly salary.
Individual Accounts: Each employee has an individual account where the contributions are deposited, and the pension is based on the total contributions and the employee’s average salary.
Retirement Eligibility: Employees can claim this pension when they reach the age of 60, or in some cases, earlier under specific conditions.
New vs. Old System: There are two types of Labor Pension plans— the new system, which is mandatory under the Labor Pension Act, and the old system, which was part of the earlier Labor Standards Act. Employees who were part of the system before the new law was enacted could choose to remain under the old system, but new employees are automatically enrolled in the new system.

Labor Insurance Pension (勞保老年給付)

The Labor Insurance Pension is a social insurance benefit that provides retirement income to employees who contribute to the Labor Insurance Program (勞工保險條例). This pension is a part of Taiwan's broader social insurance system, and it is available to a wider range of workers, including those who are not covered by the Labor Standards Act.

Key Points:

Broad Coverage: This pension is available to employees in various sectors, including those who are self-employed or work in irregular employment. Unlike the Labor Pension, it is not tied to the employer-employee relationship but is instead based on contributions to the Labor Insurance system.
Contributions: Workers and employers both make monthly contributions to the Labor Insurance system, and the amount is based on income.
Retirement Eligibility: Workers can start claiming the Labor Insurance Pension when they reach the age of 60, provided they meet the contribution requirements.
Pension Calculation: The amount you receive from this pension depends on the amount of contributions made over the years and your insured salary.

Summary of the Differences:

Labor Pension (勞工退休金): Employer-mandated contributions for employees under the Labor Standards Act. Each worker has an individual account where the employer contributes a percentage of the salary.
Labor Insurance Pension (勞保老年給付): A broader social insurance program available to all workers, including those who are self-employed. The pension is based on the contributions made to the Labor Insurance system.

National Pension (國民年金)

The National Pension is designed for individuals who are not covered by the Labor Insurance (or Labor Pension) systems. This includes people who are:

Self-employed
Farmers
Non-employed individuals
Those who do not meet the requirements for Labor Insurance coverage.

Essentially, the National Pension is a safety net for people who are not part of Taiwan’s employment-based pension programs (Labor Pension or Labor Insurance), ensuring that everyone has access to basic retirement benefits.

Key Points:

Eligibility: Available to individuals aged 25 to 65 who have been residents of Taiwan for at least 5 years.
Contributions: Individuals must make monthly contributions based on a set income level, with a fixed contribution amount that varies depending on the income range.
Retirement Age: You can start receiving benefits at age 65, though you can choose to begin receiving a reduced pension at age 60.
Pension Amount: The amount depends on the individual’s contributions over the years and the income levels used to calculate the premiums.

This system ensures that people who are not employed or do not participate in Labor Insurance still have some level of retirement income once they reach the required age.

If you're living in Taiwan long-term or planning to retire here, you may be wondering what retirement strategy best suits your situation. Taiwan’s pension and retirement systems differ from those in many other countries, and understanding how to navigate them is key to securing your future.

Our CPA, Mr. Kevin Weng, brings years of expertise in tax planning, financial strategy, and investment portfolio management. He can help you build a retirement plan tailored to your needs and goals in Taiwan.

Overview of Government Pension Systems in Taiwan: Labor Pension & National Pension

Labor Pension (勞工退休金)

Key Points:

Mandatory for Employers: Employers are required to contribute to the Labor Pension system for their employees. The contribution is typically 6% of the employee’s monthly salary.

Individual Accounts: Each employee has an individual account where the contributions are deposited, and the pension is based on the total contributions and the employee’s average salary.

Retirement Eligibility: Employees can claim this pension when they reach the age of 60, or in some cases, earlier under specific conditions.

Labor Insurance Pension (勞保老年給付)

Key Points:

Broad Coverage: This pension is available to employees in various sectors, including those who are self-employed or work in irregular employment. Unlike the Labor Pension, it is not tied to the employer-employee relationship but is instead based on contributions to the Labor Insurance system.

Contributions: Workers and employers both make monthly contributions to the Labor Insurance system, and the amount is based on income.

Retirement Eligibility: Workers can start claiming the Labor Insurance Pension when they reach the age of 60, provided they meet the contribution requirements.

Pension Calculation: The amount you receive from this pension depends on the amount of contributions made over the years and your insured salary.

Summary of the Differences:

Labor Pension (勞工退休金): Employer-mandated contributions for employees under the Labor Standards Act. Each worker has an individual account where the employer contributes a percentage of the salary.

Labor Insurance Pension (勞保老年給付): A broader social insurance program available to all workers, including those who are self-employed. The pension is based on the contributions made to the Labor Insurance system.

National Pension (國民年金)

Self-employed

Farmers

Non-employed individuals

Those who do not meet the requirements for Labor Insurance coverage.

Key Points:

Eligibility: Available to individuals aged 25 to 65 who have been residents of Taiwan for at least 5 years.

Contributions: Individuals must make monthly contributions based on a set income level, with a fixed contribution amount that varies depending on the income range.

Retirement Age: You can start receiving benefits at age 65, though you can choose to begin receiving a reduced pension at age 60.

Pension Amount: The amount depends on the individual’s contributions over the years and the income levels used to calculate the premiums.

If you're living in Taiwan long-term or planning to retire here, you may be wondering what retirement strategy best suits your situation. Taiwan’s pension and retirement systems differ from those in many other countries, and understanding how to navigate them is key to securing your future.

Our CPA, Mr. Kevin Weng, brings years of expertise in tax planning, financial strategy, and investment portfolio management. He can help you build a retirement plan tailored to your needs and goals in Taiwan.

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