The panel meetings of the Economic Development Advisory Conference recently concluded. Controversies over the employment panel's proposal remain, however, as the panel has suggested including both the "individual retirement account" system (IRA, 個人帳戶制) and the "annuity insurance" system (年金制) in local workers' retirement programs.
According to the Council of Labor Affairs, both systems should coexist in order to provide more options for Taiwan's workers. What's more, neither of the systems will increase the financial burden on the government. For the IRA system, workers must set aside a portion of their income, up to a stipulated amount each year. For the annuity insurance system, workers must bear additional expenses themselves if the deposit rate exceeds 6 percent. Meanwhile, workers' deposits and interest for the retirement pension are tax-deferred until retirement.
Although both systems are considered "portable" (
The term "portable" here refers to a retirement program which allows a worker, without being restricted by the Labor Standards Law (
To help workers who were unable to collect their retirement pension after their factories were shut down, former labor council chairman Hsu Chieh-kuei (
Due to objections raised by those who wanted the ceiling set at 2 percent, the labor council proposed a second plan, suggesting that employers start depositing 2 percent of a worker's yearly wage and to gradually raise it to 6 percent in a few years.
The labor council had ignored labor groups' protests against what they called an excessively low rate which would reduce workers' pensions.
This time, the employment panel's proposal to include both the IRA and annuity insurance systems in workers' retirement programs clearly shows that the government has again compromised its stance and is trying to curry favor from both sides. It even backtracked on the deposit percentage, setting the ceiling for both systems at 6 percent. This will shrink workers' retirement pensions nationwide, making it meaningless to argue about which system is better and fairer.
A worker's retirement pension should include three parts. First, a company retirement pension (retirement pension contributed by employers, as provided for in the Labor Standards Law). Second, a social insurance pension (labor insurance paid for by insurees). And third, elderly welfare subsidies (an elderly pension or national pension budgeted by the government). Since the financial sources of the three are different, they should not be lumped together.
Taiwan's labor groups and the economic develpment advisors should debate the systems if they have different opinions about them. They should openly review their advantages and disadvantages, instead of coming up with an ambiguous proposal, such as the one recently submitted by the employment panel.
Chuang Miao-tzu is secretary-general of the National Federation of Independent Trade Unions.
Translated by Eddy Chang.
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