The Labor Insurance Fund is expected to report deficits by 2017 and declare bankruptcy by 2027, a Council of Labor Affairs (CLA) report released on Tuesday said.
Due to the rapidly ageing 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 report showed.
Based on the renewed assessment, the fund is headed for bankruptcy in 2027 rather than in 2031, as previously projected, the report added. The new projections mean 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, the agency said.
To ensure that every worker will receive a pension, the agency has proposed amendments to the Labor Insurance Act (勞工保險條例) that include adjusting the insurance premium rate upward, ensuring that the government allocates a budget for hidden losses incurred through poor fund investments and making “the government liable for the final payments,” CLA officials said.
Asked by lawmakers if the labor insurance fund is approaching bankruptcy, CLA Minister Pan Shih-wei (潘世偉) said “there is no problem with the fund in the short term.”
In the long run, the CLA will establish a fund operation mechanism that will “ease people’s minds,” he added.
Meanwhile, Cabinet Deputy Secretary-General Huang Min-kung (黃敏恭) said hidden debts are an unavoidable part of labor insurance operations. With or without written regulations stipulating that the government must ensure that payments are made, workers’ benefits will not be jeopardized, he said. Huang added that the volume of the labor insurance fund has increased from NT$200 billion (US$6.8 billion) in 2009 to NT$520.2 billion as of Aug. 31.
“Currently, inflows and outflows are normal,” he said.