Mon, May 01, 2017 - Page 3 News List

INTERVIEW: Minister Lin addresses critiques of pension reform

Minister Without Portfolio Lin Wan-i spoke about opposition to reforms of the public servant pension system in an interview with ‘Liberty Times’ (sister paper of the ‘Taipei Times’) staff reporter Jennifer Huang, saying public support is at a historical high and that reforms are crucial to avoid bankrupting the system

Translated by staff writers William Hetherington and Jake Chung

Minister Without Portfolio Lin Wan-i speaks in an interview in Taipei on April 19.

Photo: Peter Lo, Taipei Times

Liberty Times (LT): Despite public opinion polls showing 80 percent support for the reforms, misconceptions and opposing voices remain. Should these be addressed and clarified?

Lin Wan-i (林萬億): The biggest point of contention has always been about violation of the principal of legitimate expectation if reforms are retroactively applied. However, the reforms have never called for retroactive application, meaning there has never been a plan for previously distributed pensions to be returned. The reforms focus on changes that are to be applied to the future implementation of the system.

The Council of Grand Justices in 2014 passed Constitutional Interpretation No. 717, which clearly explains that if the nation’s interests are at stake, cuts to pensions are to be allowed. Therefore, adjustment of the 18 percent preferential interest rate is not a violation of constitutional law.

The reforms are intended to rescue the pension system and allow it to do much more for the public good, safeguarding the interests of aging civil service pensioners and protecting the nation’s finances; it is absolutely not a violation of the principal of legitimate expectation.

There are people who have always said that hidden debt from the pension system is made up. Actually, the debt is a real, objective fact that has been confirmed numerous times through calculations by both pan-blue and pan-green governments.

The Public Service Pension Fund has been in the red since 2011. By 2020, the fund’s assets will be completely used up and the fund will be bankrupt — these are facts.

The hidden debt — the debt that we have to deal with now and in the future — has reached NT$18 trillion (US$596 billion). It has been calculated numerous times and is unavoidable. We cannot just put it out of our minds and decide that it does not need to be paid immediately. If we do not cure this diseased system, then bankruptcy will be inevitable.

LT: Some of the protesters believe the reforms are a smear campaign against civil servants. Others have argued that they have paid more into the system than public-sector workers and therefore should be able to withdraw more in retirement, while yet others say what they withdraw is exactly what they contributed. How would you respond to these arguments?

Lin: Early on, civil servants had low salaries, but there were many increases over the years. Today, civil servants have higher average pay than public-sector workers and retirees are mostly concentrated among the highest earners. Pension contributions during employment are higher for civil servants in comparison with workers whose salaries are at the other end of the spectrum, so they can also withdraw more in retirement — there is no problem here.

Those covered by the labor insurance system retire at an average age of 61 and receive a monthly pension of NT$16,179 (not including employee retirement plans). Civil servants retire at an average age of 56 and receive NT$56,383 per month, and educators in the public-school system retire at 54 and receive NT$68,052 per month.

However, in the case of civil servants, the government pays 65 percent of pension contributions as the person’s employer — which is basically paid by everyone [through taxation].

Civil servants also enjoy many preferential conditions which have been a source of controversy, like the 18 percent preferential-rate savings account, which the government is still making payments for until 2055.

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