In a broader sense, preventing retired public university professors from teaching at private schools and thus receiving double incomes involves pension reform. In a narrow sense, there should be at least two system designs.
First, the retirement age should be 65 or older, just as in the US and some European countries. As the global population is aging, many countries have amended their laws, lifting the retirement age to 67 or 68 as a way of addressing their financial difficulties.
In Taiwan, the retirement age for the Labor Pension is between 60 and 65. The average retirement age of civil servants is 55, and for those working in education, it is 54. A person who retires from the public sector in their early 50s — the prime of their life — to work in the private sector, thereby earning a double income, is not in line with the original intent of the pension system. This is a special privilege extended to military personnel, civil servants and public school teachers. This amounts to “legalized collective exploitation.”
Second, there should be a “reduced pension.” Despite Taiwan’s retirement age being 65, the system should be flexible in order to avoid rigidity by including a reduced pension system. By taking people’s physical conditions and career plans into consideration, the US and some European countries offer a reduced pension for those who want to retire early. For example, people who retire at the age of 65 could be given a pension of NT$80,000, while those who retire at 60 could get NT$60,000 and those who retire at 55 could get NT$40,000, or be given the choice to wait until they are 65 to receive a pension, in which case they would receive a full pension.
In a capitalist society, everything depends on ability. There is no need to criticize retired national university professors for teaching at private schools, saying they are receiving double incomes and causing unemployment among young academics, because this is just how the market works. As long as it is not legally prohibited, it is a matter of ethics. However, there should be a “correction design” built in to the pension system, so that people can evaluate the benefits of a long-term pension reduction and a short-term full salary from a new job.
As for how much the pension should be reduced, the government could consider including measures to discourage professors from retiring early and transferring to private schools. Using systemic design to direct behavior would be more effective than the legislation of a “revolving door clause” to avoid conflicts of interest, or a ban on retired public university professors taking full-time teaching jobs at private schools and receiving double incomes. Also, this could relieve the cost and responsibilities of administrative monitoring.
At the moment, the nation’s labor insurance already has a similar device that grants insured workers, who retire five years early, 80 percent of their full pensions. Such a device is still absent from the retirement system for military personnel, civil servants and public school teachers. Not only is it too early for workers to retire in their 50s, it also contradicts the government’s policy of encouraging workers to delay their retirement. The fact that they also receive is not in tune with the nation’s demographics or fiscal pressures.
Pension reform is fraught with problems, and the problems are not limited to education. There are “door gods,” or guardian angels, in the financial sector, and many retired officers also receive double incomes.
In the face of vested interests, national leaders must push resolutely for reform, otherwise it will be very difficult to terminate the networks of vested interests.
James Lin is a fellow of the Society of Actuaries in the US.
Translated by Eddy Chang
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