5.RETIREMENT BENEFIT PLANS
a.Defined contribution plan
The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed
defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual
pension accounts at 6% of monthly salaries and wages.
b.Defined benefit plan
The Corporation also has defined benefit plans under the Labor Standards Law (LSL). Benefits under the plans
are based on employee’s length of service and average base salary in the last six months before retirement (for
the length of service before the LSL was enacted) or three months before retirement (for the length of service
after the LSL was enacted).
Personnel employed by the Corporation are referred to as either appointees or employees. The appointees’
retirement fund (ARF), established under the guidelines of the Ministry of Economic Affairs, requires monthly
contributions of amounts equal to 15% of monthly salaries and is administered by a pension plan committee.
The ARF is deposited in the committee’s name in a bank. Based on an actuarial report, since the contribution
surplus in plan assets exceeded the defined benefit obligation, the Corporation need not continue to contribute
to the plan assets starting from July 2012. The employees’ retirement fund (ERF) entails monthly contributions
by the Corporation to a fund at amounts equal to a fixed percentage of 15% of salaries and wages. The ERF
is administered by a monitoring committee and is deposited in the committee’s name in the Bank of Taiwan.
Based on an actuarial report, the Corporation should contribute to the ERF amounts equal to a fixed percentage
of 2% of taxable payroll starting from July, 2013. The plan assets are invested in domestic (foreign) equity and
debt securities, bank deposits, etc. The investment is made at the discretion of the Bureau of Labor Funds,
Ministry of Labor or other agencies authorized by the government to make the investment. However, based on
the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the return
on the ERF investment should not be below the interest rate for a two-year time deposit in local banks.
The Corporation awarded specific retired employees consolation benefits in accordance to corporate polices.
Under government regulations, the Corporation may recognize additional pension cost to meet the
additional pension obligation arising from the planned privatization, but the additional pension cost should
not affect the budgeted dividends to be distributed to the government.
The additional pension cost recorded is summarized as follows:
Period
Amount
July 1, 1998 to December 31, 1999
$ 8,493,903
January 1 to December 31, 2001
5,513,297
January 1 to December 31, 2002
4,370,123
January 1 to December 31, 2003
2,417,711
January 1 to December 31, 2004
5,527,940
$ 26,322,974
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Financial Statements
