Thu, Nov 08, 2012 - Page 8 News List

Heaven help the pension system

By Huang Juei-min 黃瑞明

As far as Taiwan is concerned, the issue is no longer about whether the system is fair and just. There is a real concern over how much longer the nation can afford payments of as much as NT$240 billion (US$8.2 billion) — a figure higher than government revenues from income tax. Press reports over the last few days that the government employees’ pension fund will go bankrupt by 2029 may well be overly optimistic. In the next eight years the large numbers of government employees still on the “75 system” are likely to retire en masse as soon as they are eligible to do so, and this is sure to speed up the depletion of the pension fund.

It is possible for countries to go bankrupt. If you do not believe it, you need look no further than Greece. When the day comes, as come it must, that civil servants, both retired and still working, get together in a show of force to protest any changes to their pensions, Taiwan’s economy will not be too far from the brink of collapse.

If the government has any intention to set the country on a sustainable path it is going to have to undertake a thorough reform of the pensions system, one way or the other. In particular, this means a considerable reduction, applied retroactively, in the pension packages of retired government employees. However, given what Examination Yuan President John Kuan (關中) and Minister of Civil Service Chang Che-shen (張哲琛) have been saying, all we can do now is pray.

God bless Taiwan.

Huang Juei-min is a law professor at Providence University.

Translated by Paul Cooper

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