The government’s position on looming financial distress in the Labor Insurance Fund remained unclear as various Cabinet officials offered conflicting statements on the problem since it was highlighted in a report by the Council of Labor Affairs (CLA) on Tuesday.
Due to the rapidly aging population, the insurance fund — which provides money for retired workers’ pensions — will begin to record a deficit in 2017, three years before the original projection, the CLA report showed.
The CLA said the fund is headed for bankruptcy in 2027, rather than in 2031 as previously projected, meaning that those who are 50 years old this year will possibly be faced with a bankrupt labor insurance fund by the time they apply for their pensions.
In a change of tone, at a press conference yesterday, Executive Yuan acting spokesperson Huang Min-kung (黃敏恭) relayed a statement made by Premier Sean Chen at a weekly Cabinet meeting yesterday saying that the government is duty-bound to ensure the financial soundness of the fund.
“Premier Sean Chen (陳冲) said the government should definitely assume the ‘ultimate liability’ for the final payment. People who enroll for the insurance may rest assured,” Huang told a press conference following the Cabinet meeting.
In response to the release of the report, statements made by Chen differed from comments made by Huang on Tuesday, when he said there was no need to make it mandatory that the government is liable for the final payments.
Later yesterday, Huang clarified his comments, saying Chen did not use the term “ultimate liability,” while he did promise that the government will monitor the operation of the fund and revise the insurance program to address the problem.
In May, the CLA proposed an amendment to the Labor Insurance Act (勞工保險條例) to the Cabinet, under which the CLA suggested that the government allocates a budget for hidden losses incurred through poor fund investments, in addition to raising insurance premiums.
The CLA proposal was not accepted due to opposition from the Ministry of Finance.
Ministry of Finance Minister Chang Sheng-ford (張盛和) yesterday reiterated the ministry’s position that raising the premium and improvement of fund investments, rather than allocation of government budget, should be used to resolve the deficit problem.
Separately yesterday, the Democratic Progressive Party (DPP) caucus demanded the government allocate budgets in the next 10 years to save the Labor Pension Fund from bankruptcy by 2027.
The administrative branch has violated a resolution of the Legislative Yuan in 2008 which asked the government to allocate budgets in 10 year’s time for hidden losses incurred through poor fund investments, DPP Legislator Pan Men-an (潘孟安) told a press conference.
The government’s action on various funds has been inconsistent, Pan said, as it had allocated a total of NT$300 billion (US$10.3 billion) over 10 years beginning in 2001 to the Civil Servant Pension Fund, which suffered similar investment losses.
“You cannot save the civil servants but leave the laborers behind,” Pan said.
DPP Legislator Chiu Chih-wei (邱志偉) also questioned the Chinese Nationalist Party (KMT) administration for its inconsistency.
While the CLA recommended raising the labor insurance premium rate to increase revenues of the fund, Chiu said, the government has never recommended raising the premium rate for the civil insurance program.