Fri, Oct 19, 2012 - Page 1 News List

DPP calls for Labor Fund rescue

UNFAIR REFORM:The CLA has proposed solutions to the bankruptcy facing the fund, but legislators said these would result in higher premiums and lower pensions

By Chris Wang  /  Staff reporter

Uniform treatment should be adopted toward all pension fund programs to uphold the principles of justice and fairness, and the benefits of more than 9 million workers should not be sacrificed to save the Labor Pension Fund from bankruptcy, the Democratic Progressive Party (DPP) caucus said yesterday.

“In comparison with the policyholders in pension funds for military personnel, public servants and teachers, policyholders in the Labor Pension Fund, which reportedly faces bankruptcy in 2027, are not treated fairly,” DPP Legislator Pan Men-an (潘孟安) told a press conference.

The Council of Labor Affairs’ (CLA) provisional plan to reform the fund would sacrifice workers’ benefits to prevent it from going bankrupt, Pan added

Well aware of the danger, the council proposed in May to amend the Labor Insurance Act (勞工保險條例), suggesting the government allocate a budget for hidden losses incurred through poor fund investments, but the proposal was rejected by the Cabinet.

However, the budget allocation was listed as mandatory for other pension funds and the government was made liable for the final payments.

“The rejection of the CLA’s proposal, combined with the rejection of the proposal to raise the minimum monthly wage, we cannot help but feel that the government views workers as its enemy,” Pan said.

That was why the DPP caucus has called for a review of all pension fund programs and advised President Ma Ying-jeou (馬英九) against creating class conflict, he added.

In response to the crisis, the council has drawn up a provisional reform plan for the labor fund proposing three possible changes: raising the premium rates from 7.5 percent, lowering the replacement rate of income and lowering the monthly insurance salary.

These three measures would further jeopardize workers’ interests because they would have to pay higher premiums and receive less pension, DPP Legislator Lee Kun-tse (李昆澤) said, adding that the council had not mentioned the government’s responsibility anywhere in its plan.

“The controversy is actually very simple: The government’s liability for the final payment is the most critical factor. If CLA Minister Pan Shih-wei (潘世偉) cannot safeguard workers’ rights, he should step down,” DPP Legislator Chen Chi-mai (陳其邁) said.

The disparity between various pension programs is clear, Chen said, as the income replacement rate for the National Pension Fund is about 45 percent, compared with 64.75 percent for the labor fund.

The income replacement rate for public servants, who may receive pensions from both the public servant insurance program and the public servant compensation fund, is 115 percent, which means retired public servants would be paid a monthly pension that is higher than their pre-retirement salary, Chen said

“If we want to talk about reform, we should carry out a uniform reform on all pension programs,” he added.

DPP Legislator Tsai Chi-chang (蔡其昌) said fairness is key in resolving the matter and there should be only one standard in various pension programs.

“Otherwise, society will lose its stability and harmony,” Tsai said.

Separately yesterday, Cabinet Deputy Secretary-General and acting Cabinet spokesman Huang Min-kung (黃敏恭) quoted Premier Sean Chen (陳冲) as reiterating at the weekly Cabinet meeting that the government would not let the fund go bankrupt. Huang quoted the premier as calling on people to stay calm, adding that the government has vowed to find solutions.

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