Pension/Severance: Moving from "Old system" (Labor Standards Act LSA) to "new system" (Labor Pension Act LPA)

Several questions for several friends, all employed in one company. Maybe someone has some insight or ideas that could help. They plan to get legal counsel, maybe someone can recommend a lawyer that specializes in such topics and speaks excellent English (or German)?

First of all, if an work ARC holder is in the old system (LSA) and marries a local, is it correct that he must change to the new system (LPA) because “foreign spouses are mandatory pension contributors”. I suspect this is wrong, and instead the worker may choose to stay in the old system: Number 4 states that “If this kind of workers desire to continue to abide by [the old labor pension system], he/she shall express such a desire to the business entity in writing […] within 6 months after his/her acquisition of said status.”

The second topic is: An employer wants all workers to change to a different company of the same parent company. Some employees are APRC holders (work based) with ~20 years of work seniority in their company. Currently they are still in the old system (LSA), the employer has put aside quite a bit of money for their pension/severance according to that system. They are offering everyone to either enter the new company (keeping their work seniority), or leave and get severance pay. Generally, they want everyone to transfer to the new company.

Is the following understanding correct?

  1. The employees that transfer to the new company must switch to the new system (LPA) because of entering a new contract at a new legal entity

  2. The money put aside for their pension/severance according to the old system (LSA) will simply be pocketed by the employer

  3. Even if calculating with the same work seniority, both their pension and severance seem very much lower with the new system compared to the old one. Also, according to the new system they can only retire (get pension payments) after they turn 60, instead of after 25 years at the same employer with the old system.

  4. There is no way for the employee to both keep working at the new company, and keep their old system pension (or at least get their old system severance and then work at the new company).


I’m not sure about that one.

For the “new company” part, there’s at least one Supreme Court case stating that when a company changes in nominal terms (new registration) but not in practical terms (same people etc.), it’s the same entity in terms of its obligations as an employer. I can find the citation if you want.

The fact that the employer is offering continuity of seniority indicates that the new company sees itself as a continuation of the old company, in employment terms. So if it argues at the same time that the employees who keep their seniority need to switch to the new pension system, that appears to be a contradiction.

Either way, please keep us updated about this case.

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Thanks a lot for these comments. The reasoning of the company seems to be “the government requires to change to the new system, we can’t stay at the old one even if we wanted to”. Maybe knowing this case reference could help, if it’s not too much trouble it would be much appreciated.

Looks like BS. Because government typically requires something based on some grounds. Which one? Good question…
IMHO, they (the company) are very interested to “save” some money. At least the future contributions. But maybe not only. Here I would suggest to ask them just one question: What will happen with the already accumulated “reserved fund” ? If they are absolutely honest they should transfer all the accumulated money to the newly created personal employee accounts (new system).

Weird, because we work for the government of ROC and they gave us a choice: stay in the old system or change. Most people who were closer to retirement chose stay.

@Icon when was that? Was it when you changed employers? Or was that just when the new system was introduced?

I was given a choice early last year because my company claimed the govt was making everyone choose by the middle of the year if they wanted to remain in the old system. To do so, you had to provide a letter requesting it. Because I’m stupid and couldn’t figure out which was better for me, I moved to the new system. I think it was a mistake.

When the system was voted in this year. I think.

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Try 最高法院100年度台上字第1016號裁判.

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Thanks a lot!

A friend has a “situation” at work and needs some legal advice. She’s close to retirement using the old system. Now the employer suggests a settlement before she reaches the time when she’s entitled to pension payment. They want her then continue working for the company using the new system. The amount suggested in the settlement is calculated based on the salary of the last six months. Because of the Covid situation, she’s been working less over that period, so the salary came down a bit. This makes a huge difference, though. I estimate NT$400,000 less than compared to the sum based on the salary she had just half a year earlier.

So here are my questions.

  • Has anyone here done a settlement like this?

  • I think there was a deadline for switching from the old to the new system (can’t remember when that was). So is the above proposition even possible? Can she switch to the new system like that?

  • Is the money she would receive in the settlement tied to the new system? Like, she can only get her hands on the money after reaching 60 years of age?

  • Is there a legal service somewhere she could consult just to get some clarification on those laws?

Iirc the deadline to switch was the same year the new system was expanded to PR’s.

If it’s a proper settlement in accordance with the Civil Code, she can ask for any amount she wants, higher or lower than what she’s otherwise entitled to. The parties agree to extinguish a claim in exchange for something else.

Short consultations with free lawyers are available at the labor department on certain days at certain times (she should go to the one in the city/county where she works) and at Taipei City Hall, plus the Legal Aid Foundation.

She can also try asking the Bureau of Labor Insurance for advice, but in my experience they’re not terribly helpful.

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This should be the place, right?

If the place of work is in Taipei City, yes.

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