Various civic groups forming the “Youth Anti-Debt Alliance” voiced their concern yesterday, claiming that the new labor insurance system may cause a “financial black hole” and damage their right to collect payments when they retire.
Under the new system, the monthly labor insurance premium will be raised year by year from 7.5 percent of an employee’s monthly salary to 13 percent.
The insurance payment collection mechanism will also change from a single lump sum payment to a series of monthly payments after retirement at the age of 65.
“The new plan means that the younger you are, the more you have to pay,” Vincent Chou (周榆修), chairman of the Taiwan Young Democratic Union, told a news conference at the legislature.
“For example, I was born in the 1970s, I started working at 25, and when I reach my legal retirement age of 65, I will have paid NT$1.46 million [US$48,000],” he said. “Under the same set of circumstances, someone who is born in the 1980s will have paid NT$1.69 million, while my son, who is only 13 months old, will be paying a total of NT$1.83 million.”
However, there is no guarantee that an insured individual will be able to collect the payment after he or she retires.
“Under the old labor insurance plan which allows someone to collect a one-time payment after he or she retires, someone who makes NT$30,000 [US$990] per month will be collecting a total of NT$1.4 million,” said Lee Huai-jen (李懷仁), a spokesman for the anti-debt alliance.
“However, under the new system which allows one to collect the payment monthly, the longer you live, the more you would collect,” he said. “So for one who makes NT$30,000 a month, retires at 65 and lives until 78 — the average life expectancy — he or she will be collecting a total of around NT$2 million instead.”
Lee said that a “financial black hole” would thus be created.
The group’s worries are not baseless.
The Council of Labor Affairs admitted that, under the new plan, the labor insurance program may be broke within 19 years.
“What we need is inside-out labor insurance reform,” said Huang Yi-ling (黃怡翎), a member of the alliance. “Under the new plan, we don’t see any economic security for our old age.”
Taiwan Labor Front (TLF), on the other hand, yesterday praised the adoption of the new labor insurance pension system.
TLF secretary-general Son Yu-lian (孫友聯) said in a statement that he believed a pension system, rather than a one-time insurance payment collection “could better take care of laborers’ life in retirement,” while also pointing out some ideas for improvement.
“We expect that further amendments will require all workers — regardless of occupation — to be included in the labor insurance pension system,” he said. “And the options laborers have vis-a-vis the labor pension and the national pension systems must be explained to them so that they can make an informed decision,” Son said.
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