The national pension system, a new welfare program for senior citizens, goes into effect today, providing assistance to those who are not covered by other insurance policies in their old age or when they become disabled, the Ministry of the Interior said on Monday.
In the first year of the new system’s implementation, the monthly premium is calculated according to the basic minimum wage, which is NT$17,280 (US$536) at present. The premium rate for the insurance is 6.5 percent for the first year and will increase by 0.5 percentage points in the third year and thereafter by 0.5 percentage points every two years until it reaches a cap of 12 percent.
Insured people must pay 60 percent of the premium, while the central government will be responsible for the remaining 40 percent, the Bureau of Labor Insurance said.
Under the regulations, an insured person who pays a monthly premium of NT$674 for 40 years will receive NT$8,986 every month from the age of 65 — the standard retirement threshold — until death.
The program has come under fire, however, from people who have voiced their concern about the country’s financial state and political stability.
Chen Shu-lin, a 53-year-old woman who retired from a factory job four years ago, said that if she pays the monthly premium of NT$674 for 12 years until 65, she can receive only about NT$4,000 per month.
“I intend to participate in the national pension system, but I’m worried that the state treasury will collapse,” she said, adding that she has little confidence in the government.
Huang Shih-wen, who has been jobless for eight months, is not worried about public finances but about political instability, especially power transfers, making her hesitant to join the program.
“I’m afraid that political party transitions will lead to changes in the pension policy,” Huang said.
According to the National Pension Act (國民年金法), which was passed by the legislature in July, funding for subsidized premiums and other expenses should be appropriated by central authorities. Apart from the annual budget, the surplus from the public welfare lottery and a 1 percent rise in the business tax could contribute to funding for the pension system.
An annual report from the legislature’s Budgetary Research Center showed that the government would have to spend NT$28.47 billion next year on national pension subsidies, but only NT$7.5 billion in surplus from the public welfare lottery is expected to find its way into the national pension fund.
The pension system is open to anyone with household registration in Taiwan aged between 25 and 65. It will cover about 3.53 million people, including the jobless, street vendors, housekeepers, naturalized foreign spouses and students older than 25.
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