What is the full form of LPA
LPA: Labor Pension Act
LPA Stands for Labor Pension Act. The Act was passed in order to safeguard employees' means of survival after retirement, improve ties between employees and businesses, and foster social and economic advancement.
With regard to labor pensions, the Act supersedes all other laws. Other laws will apply to any topics not covered in this one.
- With ownership remaining with the employee, the new Act mandates that all companies contribute 6 percent (or more) of each employee's monthly salary to an individual labour pension account that is administered by the Bureau of Labor Insurance.
- A scheme for annuity insurance must be adopted by companies with 200 or more employees, and this decision must be made through the unions representing those workers. If there are no labour unions, a business organisation may purchase annuity insurance that complies with the Insurance Act on behalf of any employees who voluntarily desire to do so in writing, with the agreement of the central competent (the Ministry of Labor) and after a labor-management meeting.
- Employed persons to whom the Labor Standards Act applies (Taiwanese citizens; foreign spouses; spouses from mainland, Hong Kong, or Macau; and permanent resident foreigners).
- Private school law pension participants are not required to contribute to the pension.
- In line with the Labor Pension Act, an employer who works or a worker or the appointed workers who are not covered by the Labor Standards Act may be eligible to make voluntary contributions and receive pension payments.
- Employees who choose to participate in the new pension system may start building up their pension accounts as their employers make contributions to them. The accounts are transferable and will be kept even if employees change employment or businesses close their doors or stop operating.
- Employers are required to offer severance payments based on a worker's employment seniority following the implementation of the new pension system, with time less than a year being computed proportionately and at a rate of half a month's compensation for every year of seniority. Six months of the average monthly earnings is the maximum amount of severance pay.
- As part of the new system, employees will also be allowed to voluntarily contribute to their pension accounts in addition to the required employer contribution, up to 6% of their monthly salaries.
- Extra donations made by individuals may be taxed against their yearly income total if they exceed the minimum requirement.
- The Labor Pension Act states that the dividends accumulated from a worker's pension fund cannot be less than the dividends on a two-year fixed term deposit from a local bank. The National Treasury shall make up any shortfall in the event that accrued dividends fall short of that minimal rate.
- When a worker eventually receives their pension payments, in addition to the principal accumulated from all monthly contributions, they will also receive dividends equal to the interest paid on a two-year fixed term deposit from a bank.
- In the future, dividends from individual pension accounts may vary due to investment results in the financial markets, but with the guaranteed minimum rate.
- A worker may start receiving pension benefits under the new system whenever they turn 60, regardless of their working situation. Employees with 15 years or more of employment history have the option of receiving a lump sum payment or a monthly pension. Employees with fewer than 15 years of service history are only eligible for lump sum payouts.
- A lump sum payment of the deceased worker's pension account may be requested by the surviving family members or chosen beneficiaries of a deceased worker who passed away before reaching pension eligibility.
- All future monthly payments must be stopped if a worker who is already receiving payments on a monthly basis passes away before achieving the average life expectancy. Any residual funds in the individual pension account must be handed to the worker's dependents or survivors.
- Employers shall make monthly contributions to a pension account opened in the name of each employee that equals 6 percent (or more) of the employee's monthly salary. This would help eliminate disputes over pension-related matters like severance payments and employee termination, which in turn lowers the chance of labor-management conflicts and boosts corporate competitiveness. Clear-cut accounting of operating costs would also assist avoid these disputes.