The Labor Insurance Fund’s over-investment in the stock market’s electronics and financial sectors was the primary reason for the fund’s losses, Taiwan Solidarity Union (TSU) Legislator Hsu Chung-hsin (許忠信) said yesterday.
The Council of Labor Affairs had left out the mismanagement of the fund’s investments when it explained why the fund could go bankrupt in 2016, Hsu told a press conference.
The council said rapid aging and low premiums were behind the tremendous losses.
As of October last year, investments in the electronics sector accounted for 51.68 percent of the fund’s investment in domestic stocks, while the financial sector accounted for 20.3 percent, Hsu said. The fund lost NT$54.8 billion (US$1.88 billion) in 2008 in the two sectors, he said.
According to the fund’s financial report for last year, the investment plan did not make sense, because the return rate for domestic stocks was minus-5.63 percent, compared to the profit rate of 15.55 percent for foreign stocks, he said.
Hsu said the decisionmakers behind the plan should be held accountable for its losses.
Despite the Chinese Nationalist Party (KMT) administration saying the fund’s losses were the result of the 2008 global financial crisis, the KMT’s investment company — Central Investment Holding Co (中央投資公司) — made huge profits during the same period, the lawmaker said.
The company, which had been placed into trust in June 2007, turned in an average annual profit of NT$860 million between 2005 and 2007 from stock dividends. The average annual profit between 2008 and last year — after the KMT returned to power — was NT$2.24 billion, Hsu said.
“If the KMT people were that good, we might as well hire them to manage the Labor Insurance Fund,” he said.
Meanwhile, DPP Chairman Su Tseng-chang (蘇貞昌), speaking at the party’s Central Standing Committee meeting yesterday, said the KMT had passed the Labor Pension Program after returning to power in 2008, but changed the content of the program, which resulted in the financial difficulty less than four years after its implementation, Su added.
The DPP demanded that the government immediately quell public discontent by reaffirming its committment to payments and bridging the gap between retirement pensions for different professions, Su said.