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The pension system's shortcomings

The eagerly awaited national pension system is finally getting somewhere.

A few days ago, the Legislative Yuan enacted the National Pension Law (國民年金法), which would provide the insured with a monthly payment ranging from NT$3,000 to NT$9,000.

During the transition period while the new system is being introduced, elderly people who already receive a living allowance will continue to do so in order to help institutionalize economic security.

However, as the new system is being implemented next year, there are certain concepts that must also be strengthened and explained.

First, it must be understood that health, occupational injury, and unemployment insurance, retirement payments, long-term care and the new pension system together make up a relatively tight social insurance system.

The social security system consisting of the four systems for social insurance -- social relief and aid, welfare allowances and welfare services -- focuses on cash payments and is only one way of caring for the physical wellbeing of citizens.

From this perspective, and especially given the potential problems with the integration of the various social security systems, the question of how the integration and operational differences between the four systems should be dealt with will define our basic approach when looking at the establishment of the national pension system and its related legislation.

To put it another way, the introduction of the basic national pension insurance may make the current social insurance system more complete, but the effects on the guarantees required to maintain current and future minimum income still need clarifying.

Even if one is eligible to receive the full pension amount 40 years from now, the total of less than NT$2 million must be complemented by individual commercial pension insurance and a professional pension so that we can build a multi-tiered economic security system.

It seems we should focus on creating a diversified source of income for elderly people.

This would include an emphasis on personal savings, creating special accounts for individual retirement savings that are either tax exempt or eligible for tax discounts, the transfer of assets between or within families, children caring for their parents, encouraging public and private companies to establish retirement systems, and so on.

At the same time, expanding economic security through the national pension insurance system to labor, health and social security requires that the government, opposition and general public give earnest consideration to the issue of whether a blueprint for developing complementary measures can be found.

If we don't, the national pension system will simply be reduced to a permanent solution for short-term relief.

The national pension insurance will be a guarantee that is connected to individual income, which could mean that some people may choose not to make their payments or may not be able to afford them.

But the individual risks during the last few years of economic insecurity must in the end be dealt with through unselfish relief and aid provided through the social security system.

Housewives are the main target of the new insurance, and complementary measures such as parental leave, child care, family assistance and relief allowances for women are other measures that deal with the concern for the nation's women in times of economic insecurity.

It will be interesting to see whether the national pension system will swing back toward a care policy that focuses on the family.

To sum things up, compared with the old system for economic security for the elderly, which focused on the working classes, the implementation of a national pension system is legitimate in that it strives to build real justice.

However, applying this to the day-to-day life of disadvantaged groups, planning economic guarantees in the later stages of life and, in particular, operating these management mechanisms are issues that are just beginning to be put to the test.

Many shortcomings that need to be dealt with still exist in our social security system, and the national pension system is the first step down that road.

Wang Shung-ming is a professor of social welfare at Chinese Culture University.

Translated by Perry Svensson
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