Group urges swift pension reform

By Abraham Gerber  /  Staff Reporter

The Executive Yuan’s Pension Reform Office Deputy Chairwoman Hsieh Chia-yi yesterday in Taipei addresses a forum organized by civic groups to discuss pension reform.

Photo: Chien Jung-fong, Taipei Times

Swift pension reform is needed to protect the rights of government employees, reform advocates said yesterday, accusing the government of failing to prevent the system’s eventual bankruptcy.

“The government’s pension reform plans should be daring and resolute, but instead they are mild and gradual. Instead of fixing things once and for all, we will be left with a system that would go bankrupt in 2044,” Taiwan Civil Service Reform Alliance spokesman Lin Yu-kai (林于凱) told a forum on pension reform. “A 28-year-old civil servant will have to face reform all over again by the time they are 55.”

Even assuming that there are no benefit cuts, young civil servants would draw less benefits than they pay into the system unless they live past 85, he said, attributing the skewed contribution-to-payment ratio to the “hole” in pension funds left by years of under-contribution by older civil servants.

“The reason current civil servants will receive such a bad deal is because we are still filling in previous deficits in pension contributions,” Lin said.

Cuts to “pension replacement ratios” of previous salaries should take place in 10 years instead of the planned 15, he said, calling for the preferential savings rate to be phased out in three years instead of six.

“More has to be done to stem the funds’ loss of blood,” Lin said, calling for the pensions of retired civil servants to be calculated based on the average salary of their final 15 years of employment, rather than the highest figure.

Calculating pensions based on the average salary of the final 15 years of employment only applies to civil servants who are yet to retire, according to the government’s reform plan, Lin said.

Official pension calculation formulas that allow automatic adjustments to benefits and contributions based on key parameters, such as average investment returns, salaries and demographics, should also be enacted to guarantee the system’s stability, he added.

“Whenever I see elderly and retired civil servants protesting, it makes me sigh, because young people should be the ones crying and taking to the streets over the proposed reforms: We will have to pay additional premiums, but are not guaranteed any benefits,” said New Power Party Legislator Hung Tzu-yung (洪慈庸), who represented the party at the forum.

The Democratic Progressive Party and the Chinese Nationalist Party (KMT) did not send representatives to the forum.

“The government says that these reforms are like ‘adjusting the suit we are wearing’ before a new one is made, but the problem is that we still cannot see what the final ‘set of clothes’ will look like. One possibility that we can foresee is that this ‘new set of clothes’ will end up disappearing and leaving us naked in ‘emperor’s new clothes,’” Hung said.

Meanwhile at separate news conference, opponents of pension reform criticized the plans for differential treatment of current and future retirees.

“People who were part of the old system earn far higher pensions than we are promised and they also have access to preferential savings accounts, but after the reform, the only thing that will be affected will be their access to preferential savings accounts,” New Taipei Teacher’s Union deputy executive director Lee Man-li (李曼麗) said.

The union belongs to the National Federation of Education Unions, which has played a role in organizing opposition to the planned reforms

“That only our pension parameters are being adjusted is unjust and unacceptable,” Lee said, adding that reforms in 1995 had already subjected most teachers to steep benefit cuts.

Only teachers and civil servants hired before 1995 have access to the preferential savings accounts.

“The parameters for current and future retirees should be identical,” she said, calling for financing the pension reform by cutting the benefits of retirees.

There is also room to discuss additional contributions and later retirement for teachers as long as their promised benefit levels are maintained, she said.