In order to fulfill the promises President Ma Ying-jeou (馬英九) made during the presidential election campaign, the Chinese Nationalist Party (KMT)-dominated legislature hastily passed the National Pension Act (國民年金法) on the final day of the legislative session. Although this was a law that many had long wanted to see passed, it has also received a great deal of criticism.
Those opposing the law directed their concerns at the problems haunting farmers’ insurance and other financial difficulties the government is facing. While their dissatisfaction is understandable, real focus should be on the unfairness of the National Pension Act. Compared with the monthly pension payments to military officials, public servants and teachers, the payments under the National Pension Act and the Labor Insurance Annuity (勞保年金) scheme — which was passed the day before the National Pension Act — are a pittance.
At present, military personnel, public servants and teachers receive pensions once they reach the age of 50 and have served for 25 years. Retired elementary school teachers receive at least NT$50,000 per month, while principals receive up to NT$100,000. The situation is even more ridiculous with retired military personnel: A person who studied at the Chung Cheng Armed Forces Preparatory School or the ROC Military Academy after graduating from junior high school can receive between NT$60,000 and NT$70,000 when they turn 40. Military personnel and elementary school teachers pay no taxes. By the time they reach the age of 80 or 90, they will have received tens of millions of dollars. When they pass away, their spouses continue to receive half of the original monthly pension payments.
No other country has a pension system so generous with taxpayers’ money. In Germany, individuals have to work for 40 years and hand out 20 percent of their salary to fund their retirement. Only after they turn 65 will they be able to receive 70 percent to 80 percent of their salary as pension payments. Because of a declining birth rate and a rapid increase in the elderly population, two years ago the German government raised the retirement age to 67 to cope with massive pension costs.
Taiwan has a ludicrous system aimed at benefiting military personnel, public servants and teachers, who only make up a small minority of the population. The majority of Taiwanese have long had to use their own savings to finance their retirement. The National Pension Act means that non-civil service workers who have paid insurance fees for 40 years will be receiving less than NT$9,000 per month after they retire.
Monthly pensions for military personnel, public servants and teachers not only have an adverse impact on social justice, but are also likely to destroy the nation’s economy.
Not long ago, former civil service minister Chu Wu-hsien (朱武獻) admitted that the pension fund was NT$1.2 trillion (US$39.45 billion) in the red. Directorate General of Budget, Accounting and Statistics data showed that NT$210 billion was spent on retirement pensions for military personnel, public servants and teachers in 2004 — equivalent to the total amount of individual income tax collected that year. The problem with this system is that the amount spent on pensions will increase as life expectancy increases, which could topple Taiwan’s economy.