Taiwan's labour insurance fund, which is an important source of funding for the country's main basic pension programme, has good short-term prospects due to recent premium and investment gains, however, the future of the programme remains challenging.
A new report published in January 2025 about the fund revealed that according to financial estimates the TWD1.1tn ($33.59bn) it had as of the end of November 2024 will be exhausted by 2031 though three years later than projected in the previous report three years ago, but hidden liabilities continue to surge. This report about the fund is released every three years.
According to the new report the revenues from premiums already fall short of benefits paid out, but many factors will help keep the fund solvent in the near future.
Taiwan ministry of labour department of labour insurance head Ms Chen Mei-nu told a news conference on 21 January 2025 that the number of insured people has surged to 10.1m, the salary basis on which premiums are paid has risen and also the premium rate recently increased to 11.5%. She said these factors will no doubt increase revenue from premiums by around TWD280bn from 2024 to 2031.
She said the government estimates also assumed a higher rate of return on the fund's investments of 4.5%, which was increased from 4% in the previous report because of an actual return rate of 7.5% from 2019 to 2023. But these gains may not be enough to sustain the health of the programme beyond 2031.
In Taiwan, workers are required to pay labour insurance premiums based on how much they earn, up to an insured salary of TWD45,800.
The premiums cover insurance for occupational hazards and also support basic retirement pensions in Taiwan for workers other than civil servants, teachers and military personnel, who have their own labour insurance system. With Taiwan's population rapidly ageing, benefits have exceeded premium revenues for the past eight years.