Taiwan Labor Pension 6% Calculator (新制勞工退休金)
Under the new Labor Pension Act, your employer must contribute 6% of your monthly salary to your individual labor-pension account at the Bureau of Labor Funds. Employees can voluntarily contribute 1-6% on top, which is tax-deductible. The account earns the Bureau's investment return and is withdrawable at age 60.
Taiwan New Labor Pension System (新制) — 6% Employer Mandate
Since July 1, 2005, all formal-sector employees are covered by the new defined-contribution Labor Pension. Employers must contribute 6% of monthly insured salary to each worker's individual account. The account is portable — it follows the employee across jobs. Contributions are invested by the Bureau of Labor Funds (BLF), with a government-guaranteed minimum return equal to the 2-year savings rate of the Bank of Taiwan. Insured-salary cap NT$150,000/month. Source: Ministry of Labor (mol.gov.tw).
Employee Voluntary Contribution — Up to 6% Tax-Deductible
Employees can voluntarily contribute 1-6% of monthly salary. Critical benefit: voluntary contributions are deductible from taxable income (similar to a 401(k)). For a 20% marginal-rate worker contributing 6% on NT$60,000 salary, that's NT$43,200/year deductible — about NT$8,640 in tax savings. The matched return + tax shield typically beat private retirement accounts for middle-income earners.
Withdrawal at Age 60 — Lump-Sum or Annuity
At age 60, employees with 15+ years of contributions can choose monthly annuity. Less than 15 years: lump-sum only. The annuity is paid for life (single annuitant or joint) using actuarial conversion. Early withdrawal before 60 not permitted except on death (paid to heirs) or disability. Source: Bureau of Labor Funds (blf.gov.tw).
New vs Old Labor Pension System
Workers hired before July 1, 2005 had the option to stay in the old defined-benefit system (calculated from years of service × average salary) or switch to the new defined-contribution. Most switched because the new system is portable; the old required staying with one employer to vest fully. The two are not combinable for years of service.
Frequently Asked Questions
What is Taiwan's Labor Pension contribution rate?
Mandatory: 6% employer-paid on monthly insured salary (capped NT$150,000). Optional: 1-6% employee voluntary, tax-deductible. Source: mol.gov.tw.
Can I withdraw Labor Pension before age 60?
No, except on death (paid to heirs) or permanent disability. Job changes do not trigger withdrawal — the account is portable and stays with the worker.
Is the Labor Pension return guaranteed?
Bureau of Labor Funds guarantees a minimum return equal to the 2-year savings rate of Bank of Taiwan (typically 1-2%). Actual returns have averaged 3-4% over the past decade, with some years 6%+.
Are employee voluntary contributions tax-deductible?
Yes, fully tax-deductible from your annual income for the year contributed. This is one of the most attractive tax shields available to Taiwan employees.
Is Labor Pension same as Labor Insurance?
No — they're separate. Labor Insurance covers maternity, disability, death, occupational injury, and old-age pension (with 15+ years service). Labor Pension is a defined-contribution retirement account. Both are mandatory.