Taiwan’s pension fund for private schools will soon extend the withdrawal age for members by a quarter-century to 90 years to accommodate increasing lifespans.
Members of the Private School Fund now have to withdraw their retirement savings when they turn 65, either in a lump sum or on a monthly basis.
“Starting from September, members will be allowed to withdraw all savings up to age 90,” Lai Jin-Nan, executive secretary of the Supervisory Committee Managing Retirement, Compensation, Resignation and Severance Matters for Private School Teachers, says in an interview with Asia Asset Management. The committee supervises the pension fund.
The move is to address the fact that the average lifespan in Taiwan increases by approximately two years every decade. The island’s average life expectancy is 84 years.
The Private School Fund “aims to provide adequate retirement protection for an expected lifespan plus six years”, Lai says.
He explains that members who wish to retain their accounts after retiring will have to first withdraw their money and then put it back into another life cycle fund comprising balanced and aggressive investment strategies. They can still pull up to 5% from this fund account every year.
“This design addresses the fact that many members dislike conservative option due to its low returns,” Lai says. “Also, our study suggests that the incorporation of balanced and aggressive options in the new life cycle fund can provide sufficient protection for members.”
The Private School Fund is a defined-contribution pension plan serving 51,000 teachers and staff of private educational institutions, with around NT$95.6 billion (US$2.9 billion) of assets as of end-February.
In 2013, it became the first in Taiwan to introduce a member choice platform with three investment options: conservative, balanced, and aggressive.
Four years later, a life cycle fund option was added that dynamically adjusts investments by allocating more assets out of the aggressive strategy into the other two options as members near 65 years old.
