Blink, and before you know it, three years have flown past. At least that is how it can seem sometimes.
The pension issue that caused a ruckus back in 2012 has still not been resolved. What was it that President Ma Ying-jeou (馬英九) said back then? “If we don’t embark upon reform of the pension system today, we will regret it tomorrow.”
The executive branch was asked to set up a pension reform task force, which did in fact put forward some proposals, but those proposals are currently off dozing in some dark corner of the legislature, while the task force has long been disbanded. Apparently, if the issue is ignored, it will just go away.
Earlier this year, Greece’s sovereign debt crisis issue heated up. In June, the Miaoli County Government said that its finances were in such a parlous state that it could no longer afford to pay its employees’ salaries. This brought the issue of national debt into sharp focus, with many people suddenly talking about Miaoli, and even Taiwan as a whole, going the way of Greece.
However, just as suddenly, the whole thing has been overshadowed by next year’s presidential election campaign. For example, on Aug. 3, when reports surfaced that the pension fund for military personnel was expected to run out in 2018, the media only covered the story for two days. Is it really the case that the issue of pension reform can just be put aside and left for the next occupant of the Presidential Office to sort out?
Pensions and national debt are inextricably intertwined. If the further accumulation of national debt is to be curtailed, the issue of pensions must be addressed first. The public knows the basic principle behind the solution here: Raise premiums, reduce payments and extend the retirement age.
However, neither retired state employees or workers actually want to see their benefits reduced. Then there are the political considerations, as political parties and politicians will surely be mindful that to suggest such changes would be tantamount to electoral suicide. Pension reform has become a political hot potato, and yet it is central to how the problem of hidden national debt is solved.
Pensions can basically be divided into two main categories: The retirement fund for state employees, which includes an annual pension bonus and state insurance, and the retirement fund for workers, which includes labor insurance and a labor pension fund.
The problem of pensions is attributable to several factors. First, the rate of return is too high, which means the nation is essentially borrowing from the next generation. Second, people are retiring too early. Third, the replacement rate of income is too high; far higher than the national coffers can afford to pay. Fourth, the low birth rate means that in the future, the few will be supporting the many. Finally, there is the difference between pensions for state employees and workers.
Nobody is saying that these problems are easily addressed. It requires various government departments and institutions, including elected representatives on both the local and national level of government, and representatives from industry, business and academia, to put their heads together and develop new legislation that everyone finds acceptable.
What is happening in Greece is fair warning. A government debt crisis could easily hit Taiwan in a matter of years. The young people of this nation already have it tough. How can the older generations stand back and allow things to get even worse for them? The government should get its act together and solve the pension issue with the utmost urgency.
Chou Huan-jung is a member of the Northern Taiwan Society.
Translated by Paul Cooper
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