Prior to the Lunar New Year holiday, the National Affairs Conference on pension reform finally laid down the government’s reform policy direction, criteria and concrete alternatives. Perhaps the protests for and against pension reform that have been going on outside and inside the pension reform committee over the past few months can now come to an end and allow the legislature to get started on rational party discussions and negotiations.
The committee’s operations over the past few months have been democratic, allowing everyone to have their say, and that is a good thing.
However, some opponents to pension reform who have no intention of discussing the issues have also appeared, and that is not so good. This is also why it has not been possible to focus discussions and why sufficient consensus remains elusive, with things almost spinning out of control at times.
Fortunately, a few days ahead of the conference, Vice President Chen Chien-jen (陳建仁), who is also the convener of the pension reform committee, finally appeared on television and presented a concrete blueprint for the reform, showing graphics and offering explanations in language that everyone could understand.
Based on level of importance, he explained the government’s plan for lowering the wage replacement rate; abolishing the 18 percent preferential interest rate on savings for military personnel, civil servants and public-school teachers; expanding the period on which the final pension is calculated and delaying the retirement age at which pensions will be paid out.
The reaction among the public was generally positive and it calmed the situation.
The National Affairs Conference was immediately followed by two opinion polls, one by Taiwan Style Foundation and one by the Democratic Progressive Party (DPP).
According to the foundation’s poll, 70 percent of respondents agree that pension reform is necessary, with 65 percent supporting its completion before the end of the year. Furthermore, 64 percent feel confident that President Tsai Ing-wen (蔡英文) will initiate reform, and 75 percent support phasing out the 18 percent preferential interest rate.
The DPP’s poll found that 70 percent of respondents support completing pension reform this year, and 69 percent favor phasing out the preferential interest rate.
Even Chinese Nationalist Party (KMT) stalwart, former legislative speaker Wang Jin-pyng (王金平), has said that the KMT’s legislative caucus should not boycott the reform.
Industrial and commercial organizations and labor unions have also expressed their support, with Acer Inc founder and former chairman Stan Shih (施振榮) strongly stating: “If there is no change, we will all die together.”
Frankly speaking, a lack of determination and diligence in combination with a neglect of the concerns and worries of a majority of the public — including younger people — were the key reasons pension reform finally sputtered and failed during the administrations of former presidents Chen Shui-bian (陳水扁) and Ma Ying-jeou (馬英九).
The Tsai administration is determined to follow through and to do it properly, so it is not strange that she has the support of 70 percent of the public. She should treasure this call for change and use it to pursue a tougher stance, demanding that the Examination Yuan and the Executive Yuan propose bills to formalize pension reform by May.
The two polls also revealed that some military personnel, civil servants and public-school teachers are opposed to reform, while the younger generations are more impatient and want to push for it to be completed as soon as possible.
How to reconcile these two views will require some thinking on the part of the Tsai administration.
In addition, the government should accept no delay in addressing specious arguments and other fears and feelings of uncertainty among those who are opposed to reform in order to avoid the appearance of fake news that would further confuse the situation.
Some of the doubts expressed by these opponents are as follows:
First, pension reform is unconstitutional, and it breaches the principle of legitimate expectation. Legislation should not be retroactive.
Second, pension reform is to drastically remove benefits for those who are already retired, but is in fact also unfair to the younger generations that have never enjoyed such generous conditions.
Third, pension reform stigmatizes military personnel, civil servants and public-school teachers by treating them as social parasites.
Fourth, the reason the pension system will go bankrupt is that the government does not have the financial skill to handle different pension funds properly. If it did, there would not be any problem.
Fifth, pension reform is just a way to postpone the bankruptcy of the various pension funds and reform will be never ending, which leaves everyone with a feeling of uncertainty.
Lastly, pension reform could result in a society where everyone is poor.
I can guarantee that National Civil Servant Association president Harry Lee (李來希), Alliance for Monitoring Pension Reform convener Huang Yao-nan (黃耀南), retired officers Wu Sz-huai (吳斯懷) and Hu Chu-sheng (胡筑生), retired former Judicial Yuan secretary-general Yang Jen-shou (楊仁壽), the candidates for the KMT chairmanship, the party’s central leadership and pro-KMT media outlets and commentators will in the next two months use these arguments repeatedly to challenge and refute pension system reform.
The Presidential Office, the Cabinet, the Examination Yuan and the DPP’s legislative caucus must take these concerns seriously and provide answers. They should also consider organizing question-and-answer sessions and publishing explanatory articles in order to reduce the number of opponents and questioners to further widen support for pension reform.
Michael Hsiao is a distinguished research fellow at Academia Sinica’s Institute of Sociology and an adviser to the Presidential Office.
Translated by Perry Svensson
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