Following the release of an actuarial report in September forecasting bankruptcy of the Labor Insurance Fund by 2027, about 58,000 people applied for lump-sum payments from the fund during the following two months, the second and third-highest number of applications in its history, an official said yesterday.
Bureau of Labor Insurance deputy manager Luo Wu-hu (羅五湖) told a meeting of the legislature’s Social Welfare and Environmental Hygiene Committee that 33,000 people received one-time payments amounting to NT$46.2 billion (US$1.59 billion) in October, and 25,000 claimed a total of NT$33.2 billion in November.
Since the Labor Insurance Fund, which provides coverage for 9.81 million workers, went into operation in 1950, the highest number of applications for retirement pay in a month was registered in July 2008, when the government was mulling whether to include monthly payments as a payout option under the scheme.
Meanwhile, about 43,000 people applied to receive their pensions in monthly installments during the two months, Luo said.
The report, conducted by a private actuary company commissioned by the Council of Labor Affairs, said the fund would begin to record a deficit in 2017, three years before the original projection, and is likely to declare bankruptcy by 2027, rather than in 2031 as previously projected.
That means that those under the age of 50 this year may face a bankrupt Labor Insurance Fund by the time they apply for their pensions.
The report put the fund’s accumulated hidden debt at more than NT$7.3 trillion, far more than its assets of NT$520 billion.
The report, adding to a spate of recent stories regarding irregularities linked to fund management and other pension systems, prompted President Ma Ying-jeou (馬英九) to call for reforms to the nation’s pension systems by the middle of this month.
Democratic Progressive Party Legislator Liu Chien-kuo (劉建國), a committee chairperson, had invited Vice Premier Jiang Yi-hua (江宜樺), who leads a Cabinet-level task force working on the proposed reforms, to brief lawmakers on its progress, but Jiang declined to attend the meeting.
Kuo Ming-cheng (郭明政), dean of the College of Law at National Chengchi University who was invited to sit in on the meeting, held government officials responsible for causing the rush to withdraw money from the fund.
Kuo dismissed the severity of the hidden debt problem and the possibility that the fund would go bankrupt, saying the actuarial report was constructed on the basis of concepts applied to commercial insurance, rather than social insurance.
Because of the mandatory nature of a social insurance, which ensures a constant stream of revenue for the fund, the hidden debt is not a serious problem, unlike that of a commercial insurance fund, Kuo said.
The inclusion of the payout option for the insured to receive their pensions in monthly installments since 2009 and the stipulation that premium rates are increased gradually also make the hidden debt problem less severe than it is for commercial insurance, he added.