Late last month, the Danish parliament passed a bill to extend the retirement age to 70. Rather than forcing everyone to work until they reach 70, it is a gradual adjustment, starting from the current age of 67 that extends by one year every five years. By 2040, Danes are expected to collect their full national pensions only when they reach 70.
At first glance, this might sound a little harsh, but an extension is quite reasonable. Today’s customary retirement at age 65 originated with then-German chancellor Otto von Bismarck’s design in the 19th century. At that time, the life expectancy of Germans was only about 35 and few of them survived to retirement age.
Now that the life expectancy in Europe is over 80 and people collect national pensions for 15 to 20 years or more after retirement, the huge financial burden has been shifted to a shrinking workforce.
The collapse of the retirement system there is a matter of time.
Denmark is not a special case, as almost all developed countries face the same issue. Medical progress has increased life expectancy and education has led to a sharp decline in birthrates, accelerating the aging of the population.
In Taiwan, for example, life expectancy was a little above 50 in the 1950s, but today it is approaching 80, while the country’s birthrate is one of the lowest in the world.
What is more worrying is the rapid deterioration of the labor insurance system. In 1995, each person aged 65 or older was supported by 10 people, but now, 30 years later, the number has dropped to 3.6.
The National Development Council estimates that by 2049, each person aged 65 or older would be supported by only two working-age people. As the working-age population drops and more people receive national pensions, it would be difficult to fill the financial black hole.
Bureau of Labor Insurance data show that the Labor Insurance Fund might be exhausted by 2028, by which time the government would have to divert great sums of money toward it, crowding out other public expenditure and aggravating the sense of unfairness among the younger generation.
The longer that reform is delayed, the greater the cost would be and the more serious the impact on society as a whole.
Despite repeated warnings of the labor insurance system going bankrupt, reforming it remains difficult, as raising the retirement age could trigger protests from older voters.
No political party is willing to take such a risk.
The blue and white camps, using their legislative majority, have repeatedly pushed major bills — but do they dare take action to reform the labor insurance system?
True social security does not lie in making empty promises, but in establishing a stable and feasible system that can run for a long time. Reform is due, or our next generation will be the one to pay the price.
Wei Shih-chang is an information technology engineer.
Translated by Eddy Chang
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