Management reform for national pension funds should be given priority over benefit adjustments in an effort to stem impending bankruptcy, a consortium of government employee unions said yesterday, ahead of the National Pension Reform Commission’s final meeting today.
Nearly a dozen representatives from the Alliance for Monitoring Pension Reform shouted slogans calling for the government to “take its paws off” fund operations and instead outsource management to improve returns.
“All the changes proposed by the government focus on some combination of increasing premiums, reducing benefits and raising the retirement age, but no thought appears to have been given to how to rejuvenate and perfect the funds themselves,” alliance convener Huang Yao-nan (黃耀南) said.
Photo: Tseng Wei-chen, Taipei Times
Alliance representatives cited several years of return figures from other countries’ national pension funds in an attempt to show that Taiwan’s funds have underperformed. Government-managed portions of funds have underperformed portions outsourced to private firms in recent years, they said.
While the outsourced portions of national pension funds underperformed government-managed portions from 2003 to 2012, the performances have reversed in recent years following a Control Yuan reprimand, with outsourced portions of funds receiving more than twice the returns of government-managed portions, Hsinchu County Education Industrial Union director-general Wu Nan-yan (吳楠嬿) said, adding that previous poor returns were caused by a failure to guard against conflicts of interest within outsourcing firms.
“The money in the pension funds is not the property of the government, it belongs to everyone who contributes,” she said, calling for investment choices to be made by professionals hired by independent pension-holding companies.
Unions should be granted half the seats on the new holding company boards instead of their current token supervisory board representation, she said, adding that fund managers are all government officials.
“Government officials are not focused on helping us to earn money,” she said, adding that government officials focus on investment stability, lacking the penalties and bonuses that incentivize performance.
“There is no effect on them personally if they do a bad job,” she said, adding that the lack of transparency over the reasoning behind investment decisions makes it difficult to determine whether some have been motivated by political considerations.
“If the system for supervising and managing the funds does not change, paying more in premiums, reducing benefits and retiring later would amount to just throwing money away, because the extra funds would be still stuck in the current ‘5 percent’ [annual returns] system,” she said.
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