Taiwan climbed one notch to 39th among 48 economies in the annual Mercer CFA Institute Global Pension Index, which grades individual pension systems in terms of adequacy, sustainability and integrity against more than 50 indicators, a survey released on Tuesday by US human resource consulting firm Mercer showed.
“In a world where fertility rates are falling and life expectancy is rising, retirement income systems are center stage,” Mercer president and chief executive Pat Tomlinson said.
Ensuring strong alignment in private and public retirement income arrangements, increasing employee coverage and encouraging higher labor force participation for those who wish to work at older ages are just a few ways to improve long-term outcomes for retirees, Tomlinson said.
Photo: CNA
The Netherlands had the highest overall index value of 84.8, closely followed by Iceland at 83.4 and Denmark at 81.6, with Mercer giving an “A” grade to pension systems with index values of more than 80.
Taiwan’s index value of 53.7, slightly up from 53.6 last year, earned it a “C” grade behind Vietnam, Japan, China and Malaysia, but ahead of Austria, South Korea, Indonesia and Thailand, Mercer said.
C-grade pension systems have some good features, but also have major risks and much room for improvement, it said.
Taiwan’s retirement income system consists of an earnings-related public pension and a national labor pension scheme in which the employer contributes 6 percent or more of a worker’s monthly wage into an individual pension account overseen by the Bureau of Labor Insurance, it said.
Upon reaching age 60, a worker can apply to the Bureau of Labor Insurance to receive the principal and investment earnings, it said.
Taiwan’s pension system could be enhanced by increasing the minimum level of support for the poorest people, increasing the labor force participation rate at older ages and lifting the state pension age as life expectancies increase, the consultancy firm said.
In Asia, Singapore maintained its top position advancing from seventh to fifth place this year, it said.
The concept of retirement is shifting and many people are transitioning gradually to retirement or rejoining the workforce in a different capacity after their initial retirement, Mercer said.
Increasing longevity, high interest rates and rising healthcare costs have put increased pressure on government budgets around the world to support pension programs, it said.
Now is the time for governments, policymakers, the pension industry and employers to work together to ensure that older populations are treated with dignity and can maintain a lifestyle similar to what they experienced through their working years, it added.
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