Taiwan Labor Insurance: Lump Sum or Monthly? Monthly Breaks Even in About 8 Years — and Don’t Take a Pay Cut in Your Last 3 Years

Data as of: Labor Insurance Act Articles 19, 58 and 59 checked word by word on 2026-10-28 (Laws & Regulations Database). 2026 insured salary table: lowest bracket NT$29,500, highest NT$45,800. The math ignores the special rule for years after 60, CPI adjustments and discounting; check your own amount with the Bureau of Labor Insurance calculator.

These two Labor Insurance shorts had 330,000 Facebook plays combined. “Lump sum or monthly” is a choice everyone eligible for the lump sum faces before retiring, so this post combines the math from both videos.

The conclusion in three sentences:

• Monthly breaks even in about 8 years at most. Start at 65 and you’re even with the lump sum around 73; after that, the longer you live, the more you get.
• The lump sum only looks at your last 3 years. A pay cut or switch to part-time in the 3 years before retiring can cost NT$730,000; monthly uses your highest 5 years, so a pay cut doesn’t matter.
• Only people with Labor Insurance coverage before 2009 can choose the lump sum.

Where I stand: I don’t sell insurance anymore, and this post isn’t sponsored. I’ll take the monthly pension myself, and fill any gap with my own ETF savings. I’ve seen many people take the lump sum and watch the money disappear.

Who can choose the lump sum?

Labor Insurance Act Article 58: people with Labor Insurance coverage before January 1, 2009 (when the Labor Insurance pension started) can choose the “lump-sum old-age benefit.”

If you were first insured after 2009, with 15+ years you get the old-age pension; with under 15 years you get the “old-age lump-sum payment,” which is a different system — see Under 15 Years of Labor Insurance — Lump Sum Only?.

How the two formulas differ

Example 1: monthly breaks even in about 8 years

Using the maximum insured salary of NT$45,800 and 30 years:

• Lump sum: 30 years hits exactly 45 months, 45,800 × 45 = about NT$2.06 million
• Monthly: 45,800 × 30 × 1.55% = NT$21,297 a month

NT$2.06 million ÷ 21,297 = 96.8 months, about 8.1 years. Start at 65 and you break even around 73.

I ran every combination of insured salaries 29,500, 36,300 and 45,800 with 10–40 years (taking the higher of the two formulas): break-even falls between 56 and 97 months, and this 30-year case is the slowest. For the same years, different salaries give the same break-even, because both options scale with salary.

Example 2: a pay cut in your last 3 years costs NT$730,000

This is the trap many people miss. Labor Insurance Act Article 19 is clear: if you choose the lump sum, it uses the average of your actual insured salary in the 3 years before leaving.

Same NT$45,800, 30 years, 45 months:

NT$730,000 is almost 3 years of monthly pension.

Monthly doesn’t have this problem: your highest 5 years are already counted, and a later pay cut can’t pull them down.

So if you’re near retirement and want to slow down or go part-time:

• If you’ll take the lump sum, don’t take a pay cut in your last 3 years.
• If you’ll take monthly, a pay cut doesn’t matter.

The biggest fear: “What if I die a few years in?”

That’s the most common reason for choosing the lump sum. But monthly has a backstop: if you die while drawing the pension, eligible family can choose a survivor pension; if you had coverage before 2009, they can also choose the “balance payment” — the lump sum you would have received, minus what you’ve already collected, paid out at once.

In other words, for those eligible for the lump sum, the worst case of monthly is roughly equal to the lump sum. The conditions and math are in a separate post: Die a Few Years into Your Labor Insurance Pension — Can Your Family Still Claim?.

So which should I choose?

My view: Labor Insurance is the floor. Monthly is a lifetime annuity that protects you against living too long; a big lump sum is the easiest money to lose on things you don’t understand.

FAQ

The short videos

Lump sum vs monthly:

The lump sum only looks at your last 3 years:

Further reading

Lazy conclusion

懶大

金融科技新創 CEO | 獨立財務顧問

1. Eligibility: only people with Labor Insurance coverage before 2009 can choose the lump sum
2. Break-even: at NT$45,800 and 30 years, the lump sum is NT$2.06 million vs NT$21,297 a month; even in about 8.1 years, and by 85 monthly pays 2.5× the lump sum
3. The trap: the lump sum only uses your last 3 years — dropping to 29,500 costs NT$730,000; monthly uses your highest 5 years, so a pay cut doesn’t matter
4. Backstop: if you die while on the monthly pension, family can choose a survivor pension or the balance payment

Labor Insurance is the floor; fill the gap yourself.

📩

訂閱電子報，獲取更多理財觀點

立即訂閱

🔒 免費訂閱，隨時可退訂

Sources

• Labor Insurance Act Article 19(3)(1), Article 58(2), Article 59 (Laws & Regulations Database N0050001, checked 2026-10-28)
• Ministry of Labor and Bureau of Labor Insurance explanations of old-age benefits; Ministry of Labor press release, 2017-09-26 (balance payment)
• 2026 Labor Insurance insured salary table (Ministry of Labor)
• Math: 45,800 × 45 = 2,061,000; 29,500 × 45 = 1,327,500; 45,800 × 30 × 1.55% = 21,297

This post explains the rules and runs example numbers. It is not advice on applying for benefits. Check your actual amount with the Bureau of Labor Insurance calculator.