The major thrust of the reform is not directed at pensions for military personnel, civil servants and public school teachers, but at cuts in the labor pension.
The result is that, according to the government’s reform proposal, the lowest monthly pension payment for civil servants is higher than the highest pension for non-public-sector employees. This is not reform — this is finding a scapegoat for the financial collapse. In the eyes of the Ma administration, that scapegoat should be the nation’s non-public-sector employees.
The unreasonable parts of the pension reform proposal must be improved if the we are to find a solution to the problem.
The most criticized part is that the government uses most of its resources to care for military personnel, civil servants and public school teachers, and their benefits include educational subsidies for their children, annual year-end bonuses, performance incentives, a large funeral subsidy of three to five months salary, a wedding subsidy of two months salary, maternity benefits — two months’ salary for each child — and a NT$16,000 annual National Travel Card.
If a civil servant dies, their spouse will continue to receive their monthly pension for the rest of their life, and when salaries are increased for civil servants on active duty, the pensions for retired personnel see a corresponding increase. Retired personnel receive an annual relief bonus, as well as bonuses for the Spring Festival, the Dragon Boat Festival and the Mid-Autumn Festival.
The dispute over the annual relief bonus toward the end of last year revealed that the bonus, astonishingly, cost more than NT$20 billion each year. The preferential interest rate on part of their pension savings currently costs the government between NT$70 billion and NT$80 billion a year. That will increase to NT$140 billion by 2015. If this benefit is not abolished, the government will have to spend another NT$2 trillion or more.
If these inappropriate benefits are abolished and if the income replacement rate — unique in the world — is lowered, a large part of the fiscal black hole could be filled.
The biggest obstacle to reform is the government’s unwillingness to risk a backlash from vested interests. The government’s pension reform is not aimed at the vested interest groups, but is instead victimizing the most disadvantaged workers.
Hoping that the vested interest group will wake up and realize that they should accept reform to benefit others and avoid building debt for the younger generation is unrealistic.
Only if non-public-sector employees wake up and take concrete action to monitor the government so that it stops favoring specific groups, while sacrificing the rights and interest of workers will it be possible to stop reform from going astray.
Translated by Perry Svensson