September 10, 2025 | Financial Desk
Retirement planning often comes down to one critical choice: whether to take a lump-sum benefit or opt for a monthly annuity. For many workers, the decision depends not only on financial calculations but also on health, family responsibilities, and long-term security.
A case in point is a 64-year-old worker, known as Ah Ming, who has contributed to Taiwan’s Labor Insurance system for 14 years with an insured monthly salary of NT$35,000. Due to declining health, he is considering claiming his old-age benefit now and wants to know which option—lump sum or annuity—would serve him better.
Current Eligibility
Under the Labor Insurance Act, workers must have at least 15 years of insured coverage to qualify for an old-age annuity. With only 14 years, Ah Ming is currently eligible only for a one-time lump-sum payout. Based on the formula of average insured salary multiplied by benefit points, he would receive:
NT$35,000 × 14 = NT$490,000
Extending Coverage for One More Year
If Ah Ming continues his coverage for another year, reaching 15 years, he could then choose between a lump-sum or monthly pension. Assuming his salary remains NT$35,000:
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Lump-Sum: NT$35,000 × 15 = NT$525,000
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Monthly Pension: NT$35,000 × 15 × 1.55% = NT$8,138 per month
While the monthly annuity provides stable income, it would take about 5.4 years for the total to equal the lump-sum amount. Given Ah Ming’s health concerns, whether he would benefit from waiting that long is uncertain.
Considering Family Security
Aside from lump-sum and annuity options, there is another path. If Ah Ming continues his insurance and later passes away, his family could claim survivor benefits:
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Survivor’s Allowance: NT$35,000 × 30 months = NT$1.05 million
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Funeral Grant: NT$35,000 × 5 months = NT$175,000
In total, his family could receive NT$1.225 million, offering more protection compared to his own retirement benefits.
Broader Implications
Ah Ming’s dilemma highlights a common challenge for older workers with fewer years of insurance contributions: lump-sum payments provide immediate financial relief, but annuities offer long-term stability. For those in poor health, ensuring their family’s financial security through survivor benefits may be the most practical choice.
Experts stress that retirement planning should not be based solely on the payout amount. Workers should evaluate their health, family needs, and financial goals before deciding which option best fits their situation.
