Labor Insurance Pension benefits may shrink
By Ann Yu ,The China Post Thursday, October 18, 2012, 12:06 am TWN
Amid reports that the Labor Insurance Fund will go bankrupt in 2027, the government has devised a plan that may decrease workers' old-aged benefits. According to the Council of Labor Affairs (CLA), the Labor Insurance Fund may begin to see a deficit in 2017 and may be bankrupt by 2027. According to the regulations, those insured can choose to collect their payments in a lump sum or on a monthly basis.
Council Proposes New Amendments
CLA Minister Pan Shih-wei (潘世偉) said yesterday that the government will prevent the fund from going bankrupt.
Later in a press statement, Shih Fa-chi (石發基), director of the Council's Department of Labor Insurance, declared to protect workers' rights, adding that although amendments are being drafted, benefits will never be shrunk.
Recent reports regarding the issue have caused anxiety among workers. Lawmakers predicted that many will opt out of the program or withdraw their payments immediately.
Pan said that his council has begun drafting amendments to stabilize the fund's finance. "It shouldn't take more than three months," he said.
Proposed amendments include a new calculation of retirement benefits and a premium rate increase.
According to the CLA, employers are required to submit the average monthly insurance salary of an employee to the government for old-aged benefit calculations. "Average monthly insurance salary" is calculated by averaging the highest 60 months of insurance salary during the years of coverage. The council is planning to adjust the previous "highest 60 months salary" calculation to the average monthly salary during the years of coverage.
Government to Bear Responsibility
Pan said that he hopes to add a clause of "governmental responsibility" to the existing regulations.
"The council is still in negotiations with the Executive Yuan," Pan said. The Executive Yuan had rejected a similar proposal in early October for fear of the government's financial difficulties.
"We cannot let the Labor Insurance Fund go bankrupt. If it does, the whole nation will go down," Pan said. He also said that solutions need to be thought out carefully, as the financial situation of the fund has been an ongoing problem for several years.
Premier Chen Gives His Word
Premier Sean Chen yesterday asserted that the government will devise a plan to prevent the bankruptcy of the Labor Insurance Fund.
Unlike the insurance of government employees and school staff, Chen stressed that the Labor Insurance Fund's problem is extremely complex since it involves both workers and employers.
Chen stated that the problem emerged when the government decided to lower premium rates in 1950 as an incentive to encourage mass participation in the program. "People have only discovered the problem in the last decade," he said. "Based on a rough estimation, doubling the premium rate will not be enough to balance the expenditure of the fund," he added.
"I would be lying if I said that the government can come up with a concrete solution in one month," Chen said in response to lawmakers demanding that the problem be solved in a month.
MOST POPULAR OF THIS SECTION