A new pension fund system implemented in July 2018 under then-president Tsai Ing-wen (蔡英文) — which included phased annual decreases of the maximum income replacement ratio, higher worker contributions and an increased pensionable age of 65 — aimed to extend the Public Service Pension Fund’s solvency after projections showed it would run dry by 2030.
The reforms saved up to NT$277.4 billion (US$9.06 billion) between 2018 and 2023, boosting revenue by about 24.25 percent from 2022 to last year. Despite the system’s success, the Chinese Nationalist Party (KMT) has set its sights on rolling it back.
Legislative Speaker Han Kuo-yu (韓國瑜) on Aug. 14 argued for amending the Act Governing Civil Servants’ Retirement, Discharge and Pensions (公務人員退休資遣撫卹法), and halting reductions of pension payments for civil servants, teachers and military personnel.
This push reflects lingering frustrations among public servants, who long saw these preferential pension arrangements as part of the profession’s appeal. For many who entered the field with the expectation that these benefits would secure their retirement, the reforms have been perceived as an unfair reversal.
While the KMT has framed its proposal as “caring for civil servants,” such a move would be unnecessary, shortsighted and fiscally irresponsible.
Seventy percent of retired civil servants received an average monthly income above NT$50,000 last year, with some collecting as much as NT$80,000 — well above the average monthly salary of NT$46,450 that year. Their pensions also equal about 80 percent of active civil servants’ salaries — a reasonable metric.
It is hardly justifiable for those no longer in the workforce to earn monthly pensions so far surpassing the incomes of average Taiwanese, who must both support themselves and bear the costs of national programs through tax contributions.
Even with successful reforms, the Public Service Pension Fund already faces a critical imbalance, having been projected to run out by mid-century.
A Ministry of Civil Service report recently warned that, should the KMT succeed in halting reductions to replacement rates this year, the fund’s depletion could be accelerated by five years. It added that combining this with “individual” pension accounts for civil servants hired after July 1, 2023, would require an extra NT$29.4 billion, depleting the fund as soon as 2042.
This should serve as a stark warning. Depletion means exactly that — once the fund is empty, there would be no pensions left to pay.
Confronted with such a fiscal gap, the government would be left with no choice but to subsidize the fund or risk its collapse. Inevitably, younger taxpayers would be left shouldering this financial burden.
With the National Health Insurance system expected to face comparable funding strains in a rapidly aging Taiwan, this dynamic risks intensifying intergenerational inequality and tensions.
Ironically, this is precisely the outcome that KMT caucus deputy secretary-general Lo Chih-chiang (羅智強) claimed the party seeks to prevent.
Despite KMT assertions, the new system was not designed to undermine the contributions of civil servants, teachers or military personnel. It was implemented to preserve the pension fund’s solvency and protect the interests of future retirees.
The push for pension reform began under former president Ma Ying-jeou (馬英九), and — as Tsai emphasized — should rise above partisan divides. It is regrettable that the progress achieved thus far now risks being undone in favor of short-term political gains.
Reforms can be painful — particularly for the groups whose interests would be impacted — but they exist to ensure that support systems can survive for future generations. Halting pension reforms would not only shift an unsustainable burden onto younger taxpayers, but undermine a crucial part of the social contract supporting Taiwan’s civil service and public programs.
Sacrificing tomorrow for today is not a viable solution.
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