To strengthen the financial security of the retired citizens, the government has been actively promoting the “Double Pension” (Old-Age Pension Benefits of Labor Insurance and Old-Age Pension Benefits of National Pension Insurance) systems, helping increase the stable income of the elders after their retirement. According to the Ministry of Labor, people who have participated in both labor insurance and national pension insurance may, when attaining the age of 65, legally combine their seniority and claim double pension payments, so as to ensure the basic economic security in later life.
The Ministry of Labor further explained that, according to the Labor Insurance Act and National Pension Act, the accumulated seniority under the two systems may be combined conditionally. If an individual’s seniority under the labor insurance is less than 15 years, he/she may, when reaching the age of 65, claim the old-age pension benefits from both labor insurance and national pension insurance based on the respective years of insurance, provided that the combined seniority has reached 15 years. This ensures a two-fold protection.
For further elaboration, the Ministry of Labor provides an example. Ms. Wang has been enrolled to the labor insurance for ten years with an average monthly insurance salary of NT$30,000. After her withdrawal from the labor insurance, she has participated in the national pension insurance until the age of 65, with a seniority of 12 years. After combination of the seniority, she has fulfilled the regulatory requirement that “the combined seniority of national pension insurance and labor Insurance should have reached 15 years”. She is therefore entitled to claim pension payments from the two systems respectively. Based on the following calculation, she will receive a total of NT$8,408 each month.
- Labor Insurance Old-Age Benefit: NT$5,325 per month. (NT$30,000 × 10 years × 0.775% + NT$3,000). (Method <I> is a better option.)
- Old-age Pension Benefits of National Pension Insurance (Method B): NT$3,083 per month (NT$19,761 × 12 years ×1.3%)
If Ms. Wang opts for a lump sum payment of the labor insurance old-age benefit, she will receive NT$300,000 as a one-time payment (NT$30,000 × 10 months = NT$300,000). However, if she chooses to receive the labor insurance old-age pension benefit, it will take only four years and nine months, roughly, to receive the same amount or more. The old-age benefit, in the meantime, guarantees life-long payments. While receiving the labor insurance old-age benefit, Ms. Wang is also entitled to claim the national pension benefit additionally. She is therefore assured of a long-term protection to her financial security.
The Ministry of Labor pointed out that the decision should be made based on the financial requirements of the insured person, the situation of the family members and their health status. From a long-term perspective, however, the double pension system, being a life-long benefit from labor insurance and national pension, helps to mitigate the inflation risk, reduce the financial concerns at old age and provide better protection to the retired life.