On Wednesday last week, President Ma Ying-jeou (馬英九), accompanied by Premier Sean Chen (陳冲), Legislative Speaker Wang Jin-pyng (王金平) and Examination Yuan President John Kuan (關中), stepped up to the firing line to announce the government’s proposed pension system reforms, which will affect the lives of private-sector workers throughout the nation.
The Cabinet proposes raising the legally defined maximum labor insurance premium rate from 12 percent to 19.5 percent for private-sector workers, while cutting their benefit payment rates.
The Cabinet proposed two alternative plans for annuity benefit payments. Under plan A, the monthly benefit payment rate for the first eight years of retirement would remain at 1.55 percent of the recipient’s average insured monthly salary, after which it would be cut to 70 percent of the initial rate.
Under plan B, the monthly benefit payment rate for retirees with insured monthly salaries between NT$30,000 (US$1,014) and NT$43,900 would be cut to 1.3 percent. The insured monthly salary would be changed from the average of the highest 60 months on which premiums were paid to the average of the highest 180 months.
Simply, workers will pay more while they are working and get less back when they retire. There is no way of knowing whether reforms in this direction will be able to save the Labor Pension Fund from bankruptcy, but for workers it will get harder to get through their retirement years.
Labor insurance should be a form of social insurance, as opposed to a commercial insurance plan. However, the Cabinet’s response to the threat of bankruptcy hanging over the Labor Pension Fund is to follow the logic of commercial insurance by raising premiums, cutting benefits and raising the minimum pensionable age. The message to the nation’s workers is clear: Survival in old age is your own responsibility.
The most important feature of social insurance is social mutual aid, meaning that those who have money should help those who have less. Social insurance is supposed to be a means of redistributing society’s wealth and the rationale for this is that social wealth is created by the efforts of all members of society.
However, under the present capitalist system the distribution of social wealth is unfair. The social wealth that has been created through several decades of economic development is excessively concentrated in the hands of a minority, and the gap between rich and poor is too wide.
Under such circumstances, besides using taxation to redistribute social wealth, social insurance should be used as another corrective mechanism for achieving the same purpose.
Workers are the people who make the greatest contribution to the wealth of the nation, so it is natural that the cost of supporting them in old age should be borne by society as a whole.
However, the existing labour insurance annuity system is set up only as mutual aid among different generations of the working class. It is a mutual aid scheme among poor people and it does not redistribute social wealth in the slightest.
Most forms of social insurance in Taiwan are divided into occupational status-based insurances that depend on the occupation of the insured, such as workers, farmers, military personnel, government functionaries and public school teachers.
As a result, people belonging to different occupational categories are treated differently according to their social and economic status.