Taiwan passes bill for stock buys by pension fund

TAIPEI, March 3 (Reuters) - Taiwan lawmakers have passed a bill that will permit the government to use an estimated T$140 billion ($4.3 billion) of a pension fund to invest in the stock market, local media reported on Saturday.

The fund could provide a sizeable injection of money into local equity markets once it begins actively investing, which first requires the establishment of a special supervisory commission to manage the investments, said the United Daily News.

The commission will be set up within three to six months, the Chinese-language paper said.

Investment in the stock market is aimed at boosting the value of the fund through the return on investment, which the paper quoted Labor Affairs chief Lee Ying-yuan as saying that it could reach more than 4 percent.

Industry executives have been waiting for the government to allow foreign fund managers to manage the fund to help boost returns as Taiwan's population ages.

The portion of the pension funds that are allowed to invest in the stock market come from a new scheme that the government introduced in July 2005, local media said.

Under a new labour law that took effect in July 2005, employers are required to contribute 6 percent of their employees' salaries into the state-controlled pension fund.

Labour officials said at that time the new scheme would increase the T$380 billion labour pension fund by between T$150 billion and T$200 billion a year and would hit around T$3 trillion in 15 years.

On Saturday, Taiwan's stocks fell 0.39 percent to hover around a one-and-a-half-month intraday low, led by technology shares. (US$1 = T$32.9)

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