7. 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
The amount included in the balance sheet arising from the Corporation’s obligation in respect of its defined benefit plans
was as follows:
December 31
2014
2013
Present value of funded defined benefit obligation
$ (42,959,496)
$ (44,930,718)
Fair value of plan assets
43,061,029
44,854,046
101,533
(76,672)
Accrued pension liabilities payables
(593,129)
$ (570,000)
Other long-term care payables
$ (491,596)
$ (646,672)
