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What is the full form of LPA?

LPA: Labor Pension Act

The Labor Pension Act (LPA) is legislation that aims to ensure financial security for workers in their retirement, strengthen relationships between employees and employers, and promote social and economic progress. It was established to safeguard the means of survival for employees after they retire, improve ties between employees and businesses, and foster social and economic advancement.

In respect of labor pensions, this Act supersedes all other laws. Any matter not covered herein shall be governed by other laws.

Characteristics

• The new Act stipulates that companies must contribute at least 6% of each employee's monthly salary to an individual labor pension account, which is managed by the Bureau of Labor Insurance. The account is owned by the employee and remains with them.

• Companies with 200 or more employees are required to implement a plan for annuity insurance, which must be determined through negotiations with labor unions representing those workers. If a company does not have any unions, they may still offer annuity insurance to employees who express their interest in writing, with the approval of the Ministry of Labor and following consultation with management.

• The Labor Pension Act applies to all individuals who are considered "employed persons" under the Labor Standards Act, including:

1. Taiwanese citizens
2. foreign spouses
3. spouses from the mainland, Hong Kong, or Macau
4. Permanent Resident Foreigners

• Participants of the private school pension plan are not obligated to contribute to the labor pension plan as per the act.

• As per the Labor Pension Act, an employer who employs or employs an employee or employed workers who are not covered by the Labor Standards Act. May be eligible to make voluntary contributions and receive pension payments.

• Employees who opt to participate in the new pension scheme can begin accumulating funds in their pension accounts as their employers make contributions. These accounts are portable and will remain active even if the employees change jobs or if their employer goes out of business.

• Under the new pension system, employers are obligated to provide severance pay to their employees based on the length of their service. The severance pay is calculated as half a month's salary for each year of service, with a time less than a year being pro-rated. The maximum amount of severance pay is six months of the average monthly earnings.

• As part of the new system, employees will be allowed to voluntarily contribute up to 6% of their monthly salary to their pension accounts in addition to the required employer contribution.

• Additional donations made by individuals may be taxed on the total of their annual income if they exceed the minimum requirement.

• The Labor Pension Act specifies that the returns earned on an employee's pension fund must not be lower than the returns on a two-year fixed-term deposit from a local bank. If the dividends earned fall below that minimum rate, the National Treasury shall make up for the shortfall.

• When an employee starts receiving their pension payments, they will receive the principal amount accumulated from all monthly contributions, along with dividends equal to the interest paid on a two-year fixed-term deposit from a local bank.

• In the future, the dividends from different pension accounts may differ due to investment results in the financial markets. But with the guaranteed lowest rate.

• Under the new system, an employee can start receiving pension benefits at the age of 60 years. Regardless of their job status. Employees with an employment history of 15 years or more have the option of receiving a lump sum payment or a monthly pension and employees with a service history of fewer than 15 years are eligible for lump sum payment only.

• A lump sum payment into the pension account of the deceased employee can be requested by the surviving family members or the chosen beneficiaries of the deceased employee. Who died before reaching pension eligibility.

• If a worker who is receiving monthly pension payments passes away before reaching the average life expectancy, all future payments will cease. Any remaining funds in the individual pension account will be distributed to the worker's dependents or survivors.

• The Act requires employers to make monthly contributions to a pension account for each employee that is equivalent to 6% (or more) of the employee's monthly salary. This helps to prevent disputes relating to pensions, such as severance pay and employee termination, which can lower the risk of labor-management conflicts and increase corporate competitiveness. This also helps in clear accounting of operating costs and avoiding disputes.