Labor fund may be bankrupt by '27: CLA
By Camaron Kao ,The China Post
October 10, 2012, 12:30 am TWN
The Council of Labor Affairs (CLA) yesterday announced that based on its latest estimation, the Labor Insurance Fund will see a deficit starting from 2017 and be bankrupt by 2027, earlier than previously estimated — which means that people younger than 50 may not be able to collect their pensions when they reach 65.
The CLA's estimation takes the Council for Economic Planning and Development's (CEPD, 經濟建設委員會) demographic forecast in 2012 and the pension payments to retired workers in 2011 into account. Based on these data, the time that the Labor Insurance Fund is expected to see a deficit has been changed from 2020 to 2017, while the time that the fund is expected to be bankrupt has been moved ahead from 2031 to 2027.
Executive Yuan Deputy Secretary-General Huang Min-kung (黃敏恭) stated that in the short term, the Labor Insurance Fund will still have a surplus. With regard to the long-term problem, the CEPD has assembled a committee to work on a solution. According to Huang, the Labor Insurance Fund has increased from NT$200 billion in 2009 to NT$520.2 billion on Aug. 31 of this year.
The hidden debt of the Labor Insurance Fund increased by NT$1.2 trillion over the past two years. Chen I-min (陳益民), head of the Bureau of Labor Insurance, stated on Aug. 28 that the total amount of the Labor Insurance Fund's hidden debt had reached NT$6 trillion.
Citing the financial difficulties of the government, the Executive Yuan on Oct. 4 rejected the CLA request for the government to bear the full responsibility of covering Labor Insurance Fund expenditures, as well as the request for the government to provide a budget every year to make up for the deficit.
Huang stated that it is not necessary for the government to put the responsibility of preventing the Labor Insurance Fund's bankruptcy into law because the government cannot disregard the rights of the nation's workers.
Furthermore, Huang added that the Cabinet can make small adjustments to premium rates if necessary.
Analysts, however, warned that if the Labor Insurance Fund's financial situation deteriorates, those of the younger generation might decide not to join the insurance program, while the elderly may decide to withdraw their pensions in lump sums as soon as they reach the eligible age. As a result, the fund may face bankruptcy earlier than 2027.