Taiwan's $24b pension fund undergoes overhaul, names new chief
As part of this transformation, the PSPF is restructured and becomes a newly created bureau under Taiwan's Ministry of Civil Service, effective April 30.
The move is aimed at improving management and oversight of the $24 billion public pension fund.
According to Taiwan's new legislation that was passed in April, starting from July 1, 2023, PSPF will be transformed from a defined benefit (DB) scheme to a defined contribution (DC) scheme for new members.
To comply with the change and to improve the decision-making process, the previous Public Service Pension Fund Management Board, which fell under the supervision of the Examination Yuan, has become the new Bureau of Public Service Pension Fund under the Ministry of Civil Service on April 30.
As a result, previous PSPF chairman Chou Chih-hung, who held the post concurrently with his position as the minister of the Ministry of Civil Service of Taiwan, will no longer hold the chairman position at PSPF.
Instead, former PSPF vice chairman Morgan Chen has been named as director general — a brand-new role — and now heads the pension fund.
Chou will remain minister of the Ministry of Civil Service, a role he has been holding since 2020.
With the change, PSPF now operates under the Examination Yuan’s Ministry of Civil Service.
The Examination Yuan oversees Taiwan’s civil service system and the certification of professionals.
The reform will make PSPF operate under a similar institutional structure as the Bureau of Labor Funds (BLF), which falls under the Ministry of Labor.
A NEW CHAPTER
PSPF’s transformation happened as the number of participants, the scale of assets, and the number of beneficiaries of the pension fund continued to grow significantly, PSPF said on its website.
Moreover, the move was made to enhance the efficiency of the fund management’s decision-making and to adapt to the rapidly changing financial situation, as well as the increasing diversity and internationalisation of investment tools, PSPF said.
“I think it is a positive change for PSPF. It makes more sense for PSPF to be directly under the Ministry of Civil Service rather than being a parallel institution,” said Donna Chen, president of Keystone Intelligence, a Taiwan-based financial advisory firm.
“It will help improve management efficiency,” Chen told AsianInvestor.
The new director general Morgan Chen is a veteran of Taiwan’s financial regulators. He joined the Public Service Pension Fund Management Board in 2022 as the vice chairman.
Before that, he spent most of his career in Taiwan's Financial Supervisory Commission (FSC), where he held various senior roles in the Securities and Futures Bureau across accounting and auditing supervision, corporate finance, and securities firms divisions. He used to be director for FSC’s New York office.
Before joining PSPF, he was director of the securities firms division of the Securities and Futures Bureau under the FSC.
PSPF didn’t immediately respond to a request for comment.
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The Public Service Pension Fund Management Board was established in July 1995 for the Taiwanese government to allocate and manage the retirement funds of retired civil servants.
As of the end of March 2023, PSPF managed NT$732.9 billion ($23.8 billion) worth of assets in retirement savings for Taiwan's civil servants, teachers, and military personnel.
In the first three months of 2023, PSPF recorded an investment return of 4.57%, recovering from the 6.73% investment losses in 2022.
Over the past five years, PSPF has had an average annualised return rate of 4.37% as of the end of 2022.