There has recently been a lot of debate and confusion over pensions, which has also touched upon social security considerations involving higher contributions combined with smaller pensions and a higher pensionable age.
Let’s look first at the higher contributions. This is not just a matter of expecting the insured to pay more in the way of contributions. It is a complicated matter involving a wide range of social insurance concepts, all of which need to be considered –– Have they been?
Is the general public aware, for instance, of what is meant by risk mitigation, risk sharing and diversification, mandatory insurance payments or assistance, financial independence, limited payments or subsistence allowances?
How about social adequacy, equity and reciprocity, redistribution of income, intergenerational social insurance burden liability, social transfers, or the state as final guarantor?
The point is that the current confusion is the result of a general lack of understanding of such concepts.
These ideas and values are central to a social security system, and until such time as they are assimilated, it will be impossible to address the contradictions between the situations of retired public servants and retired private-sector workers, or those between different groups within a given industry or profession.
It is only natural for people to want to pay less and receive more and for longer, but such temptations only lead to populism that will get us nowhere save into a national crisis.
As for smaller pensions, again, the flashpoints for the debate over this issue are the different levels of provisions made within different industries or professions. This has highlighted the generous pension guarantees given to retired public school teachers, military personnel and civil servants, but ignored other pertinent considerations, such as people’s salary levels or the income replacement ratio of their pensions.
What is needed is a comprehensive assessment of the individual salary structures and social welfare provisions for individual professions, as well as the guarantees for economic security these provide during people’s working lives and after their retirement. Therefore, the solution lies in looking at individual professions and industries and their salary structures and reimbursement levels.
There is no need for all this bad feeling within society.
Finally, we turn to the issue of a higher pensionable age. It is true that there is a perfectly practical reason for pushing back the age at which one becomes eligible to receive a pension, in that it will lessen the burden on the insurance fund.
However, the financial burden of this generation will be passed on to the next generation: This suggests that Taiwanese society, with its aging demographic and low birth rate, is in denial about the nature of the problem.
It is not enough to just propose an approach of higher contributions, reduced payouts, and higher pensionable age, which are nothing but short-term emergency countermeasures to relieve strained social insurance finances. Are the foundations in place to return to a social insurance system that is fair to each generation?
What the government needs to be thinking about now is how it should approach pension reform in terms of equity between generations, equity between different professions, the poverty gap and our overstretched state finances.