The National Development Council released its latest national Population Projection Report. It states that if Taiwan’s sluggish birth rate is not dramatically increased, by 2018 the nation will have officially become an aged society — and by 2026 will have turned into a super-aged society, where pensioners constitute more than 20 percent of the overall population.
An even more terrifying truth is buried within the report: even today — with Taiwan yet to become an aged society — the impoverishment of elderly people has already begun.
According to the Directorate-General of Budget, Accounting and Statistics’ Report on Household Expenditure, there are about 1.66 million households that fall within the bottom 20 percent household income bracket, of which the over-65s make up 880,000 households. Half of all senior citizens fall into the lowest income bracket and are among the poorest households in Taiwan.
Furthermore, there are approximately 8.29 million households in Taiwan, of which about 1.57 million are aged 65 or above. Or, to put it another way, 56 percent of senior citizens are in the lowest income bracket.
For these 880,000 elderly households, average yearly disposable income is less than NT$300,000, yet their yearly expenditures average about NT$320,000. It must also be considered that there are an average of about two people in each of these over-65 households and average monthly disposable income — per head — is no higher than just more than NT$12,000. Since essential outgoings exceed disposable income, every household runs an annual deficit of NT$20,000.
If factoring in the household income of the second-lowest strata of society — within which there are about 330,000 over-65 households — after deducting expenditures from disposable income, they also struggle to break even. For this group, monthly disposable income per head is about NT$23,000.
Generally speaking, three-quarters of Taiwan’s senior citizens cannot make ends meet or are only just able to stay afloat. This shocking statistic reveals the true nature of the impoverishment of elderly people. Furthermore, an investigation into the causes has shown that the majority of workers employed in the private sector are faced with excessively low pension payments and that this is the main cause of old-age poverty.
The Ministry of Labor has confirmed to the National Committee on Pension Reform that a worker who retires after working for about 30 years, on reaching the age of 65, would receive labor insurance payments as well as pension payments under the new labor pension system that amount to less than NT$20,000 per month. Those who are unable to remain on the labor market for a longer period of time would receive an even lower pension.
Slightly more than half of all Taiwanese women participate in the workforce. This means that when just below half of Taiwanese women retire, the result of the excessively low number of working years and that many women often work as long-term, full-time housewives for no pay, mean that their pensions would be significantly lower than NT$20,000 per month, and they would only be able to rely on their national pension.
Even if a worker has paid into the National Pension Scheme for more than 30 years, they would only be eligible to receive a paltry NT$7,000. This means that Taiwanese women are more likely than men to fall into the poverty trap upon retiring.
All retired people face a serious pension crisis. Since, while still in health, Taiwanese retirees are finding it difficult to make ends meet, it is difficult to imagine how elderly people would be able to spend their twilight years in dignity and comfort, given the declining birthrate and since a state-provided system of long-term care has yet to get off the ground, despite the increasingly urgent need for such a system.
The government has established the National Committee on Pension Reform, which sits at the level of the Presidential Office. The starting point for discussion has been set and the political battle lines have been drawn.
The committee would mainly direct its “reform” at the pensions of state employees who number less than 1 million people, while deliberately avoiding any measures that would have an impact on the pensions of the nation’s more than 10 million private-sector employees.
It also appears that the committee intends to skirt around the thorny problem of where the money would come to pay for this.
Taiwan is about to face the crisis of the impoverishment of its elderly population: This is the real threat that the nation faces and it must be addressed with the utmost urgency.
Chen Po-chien is a researcher at the Taiwan Higher Education Union.
Translated by Edward Jones
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