Fri, Jul 22, 2016 - Page 8 News List

Pension reform and future service

By Hsu Yu-fang 許又方

Ever since President Tsai Ing-wen (蔡英文) took office, she has been wanting to carry out far-reaching reform of the nearly bankrupt pension system for military personnel, civil servants and public-school teachers.

As a member of this group, I am well aware of the urgent need for reform and for that reason I basically support it, in particular when it comes to “fat cat” politicians.

However, perhaps those in charge should give further consideration to the idea of lumping military personnel, civil servants and teachers together, and treating them as one homogeneous group.

Apart from all being paid by the government, the character of the work these groups do differs quite significantly and there are also differences within the groups themselves, such as between university lecturers and elementary-school teachers. If they were put on the same scale and the same pension reform standard was applied to all of them, that might not be the best approach. In particular, it would affect military personnel and police officers.

The biggest difference is between military personnel and police on one side and on the other civil servants and teachers. The reason the government offers better pension and welfare benefits to attract people to the military and police professions is that their tasks are particular: They are more dangerous — especially for police and firefighters — while the time they spend with their families is less stable and it is more difficult for them to gain the public’s respect, with the result being most people are not willing to sign up for these jobs.

This point is easily made clear simply by looking at the massive shortage of police officers — a shortage of more than 10,000 officers, including firefighters — across the nation.

If past benefits were insufficient to attract young people to these professions, it would probably be even more difficult to convince them to take the jobs if the pension wage replacement rate were cut. What would happen to Taiwan if the nation were to experience a massive shortage of soldiers and police officers?

And what about teachers? Looking at the higher-education system, with which I am familiar, the government might need to consider the loss of teachers that might result from pension reform.

For example, the son of a close friend studied at a famous school in the US for six years, which cost the family NT$15 million (US$467,873) in tuition fees and living expenses. He wanted to return home to teach after obtaining his doctorate, but after learning that entry-level pay for an assistant professor was little more than NT$60,000 per month and that a senior professor would only earn NT$100,000 per month, he was discouraged from returning, as he would basically have to abstain from food and drink for more than a decade just to earn back the money spent on his degree.

In the end, he accepted employment at a US university, earning US$100,000 per year, in addition to insurance, pension and other benefits.

In the past few years, the public has constantly been discussing the flight of talented Taiwanese and the failure to attract foreign talent to Taiwan, and it has come to the conclusion that the main reason for this is low salaries.

If the government extends the practice of giving all university-level teachers the same pay — paying all teachers the same salary regardless of their skills is questionable to begin with — to reducing the retirement benefits for all teachers across the board, it would be difficult to say whether this would be positive, but there is perhaps the risk of the number of highly skilled teachers in higher education shrinking even faster, which could have an indirect effect on the economy.

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