Back to list

Vice premier says premium hikes for pension system open to debate

2013/01/30 18:43:18

Taipei, Jan. 30 (CNA) Increases in labor insurance premiums proposed by the government are open to discussion, Vice Premier Jiang Yi-huah said Wednesday after the administration presented a plan to reform Taiwan's financially troubled pension systems.

The government proposed that premiums for the labor insurance system, which covers private-sector worker pensions, be raised from the present 8 percent of the salary on which premiums are paid to 9 percent in 2015.

The premium will then be raised 0.5 percentage points per year after that to a maximum of 19.5 percent by 2036.

"I don't believe we we can offer a more generous scenario given Taiwan's present financial situation," Jiang said, noting that many industrial countries have premiums of over 20 percent.

Labor Minister Pan Shih-wei said Wednesday that the plan would add NT$124.5 billion in 2036 to the costs of local businesses, which contribute 70 percent of their employees' labor insurance premiums, if the premium rate were to hit 19.5 percent by then.

Jiang said, however, that "we would like to understand the Democratic Progressive Party's proposed 16.25 percent premium."

The opposition DPP on Wednesday unveiled its own pension reform plan, under which it estimated that the premium rate would have to be adjusted to 16.25 percent to keep the labor insurance system in balance 20 years from now.

Lin Wan-yi, executive director of the DPP think tank, also said that the gap in contributions made by different workers to Taiwan's many worker insurance programs is too big, and he suggested that all programs target contribution rates of 60 percent for employers and 40 percent for employees.

In addition, the party proposed that the age at which people are allowed to collect pensions be made more uniform in the future and move closer to the retirement age for private-sector workers.

The party hopes to see the retirement age for all occupations raised to 65 by 2027, Liu said, noting that civil servants can retire at 55 and military personnel can retire at 43 at present.

As for the income replacement rate, the DPP supports a cut for government employees to between 60 and 70 percent to close the gap between workers and their public-sector counterparts.

Under the current retirement system for civil servants, military personnel and public school teachers, the maximum income replacement rate is 95 percent.

But Examination Yuan President John Kuan said Wednesday that the government would target an 80 percent income replacement rate for current public employees as part of the reform plan and a 75 percent rate for future public employees.

Meanwhile, DPP Chairman Su Tseng-chang brushed off a pledge by President Ma Ying-jeou to forgo a preferential 18 percent interest rate on a designated savings account when he retires, saying the public was concerned about pension reform and not about a single individual.

(By Sophia Yeh, Justine Su and Lilian Wu)