Thu, May 29, 2014 page8

• EDITORIAL: Raiding the pork barrel

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  On Monday, the legislature voted on an amendment to the Temporary Statute Regarding the Welfare Pension of Senior Farmers (老年農民福利津貼暫行條例), extending the premium payment period required to qualify for the subsidy from six months to 15 years. Although the Chinese Nationalist Party (KMT) managed to block opposition demands that it be reconsidered, this is just the beginning of the battle over the pension system.

  Half of the Council of Agriculture’s (COA) annual budget is spent on the senior farmers’ pension, leaving little money for other issues. The pension has been increased five times from the original monthly payout of NT$3,000 in 1995 to NT$7,000 per month in 2011. The COA can no longer support this fountain of money.

  The senior farmers’ pension is an example of pork barrel politics. At the time, several legislative candidates pledged to introduce a NT$3,000 monthly welfare subsidy for the elderly in their electoral districts, which was later integrated into the national pension system.

  Legislators from agricultural districts referring to the 18 percent preferential interest rate enjoyed by military personnel, civil servants and public school teachers then said that farmers also made contributions to the nation and proposed a senior farmers’ pension. Aboriginal legislators followed suit by introducing a welfare subsidy for elderly Aborigines.

  Increasing welfare for old people is good, although old age welfare that originated as a pork barrel policy is not a blessing. Taiwan’s current national pension system is complicated and confusing, including different pensions with varying restrictions and payments, leading to complaints about unfairness from some professions.

  Military personnel, civil servants and public school teachers enjoy the highest pensions, and a preferential interest rate. A retired person from any of these groups could even receive a pension exceeding their working salary. This is not well received by other groups. Although the labor insurance pension is said to provide 67 percent of a working income, this is calculated from a top salary of NT$43,900, so the guarantee is limited. These two pensions are social insurances, and a premium must be paid until retirement to receive the pension. The pension for farmers and Aborigines and the National Pension (國民年金) only amount to a few thousand New Taiwan dollars per month and are more like a handout.

  Just as the COA cannot support the budget pressures presented by the senior farmers’ pension, the government is coming under pressure from the fiscal demands presented by the pensions for military personnel, civil servants, public school teachers and labor insurance.

  In an aging society, the number of retired people increases while the working population decreases, making it increasingly difficult to support astronomical pension payments. In order not to leave debt to future generations, the government must reform the labor insurance pension and the pensions for military personnel, civil servants and public school teachers, pushing labor insurance reform toward later retirement, increased premiums and lower payouts.

  The Examination Yuan has also proposed a reformed pension system for public servants and public school teachers which includes later retirement and a lower income replacement rate. These are all moves in the right direction, but pension reform has met with stiff political opposition and has been treading water for over a year. In addition, Examination Yuan President John Kuan (關中) is about to step down while reforms are going nowhere.

  Pension reform is a major social issue with implications for social stability and the COA has now made the first move. The senior farmers’ pension, however, is just one component of the pension system, and pension payments are about to increase sharply. The government cannot continue to merely pledge reform, it must speed up the integration of pension systems for different professions and prevent a massive debt from being passed on to the next generation.
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