Pension fund applicants claim NT$76.8 bil. in Oct., Nov.
By Ann Yu ,The China PostTAIPEI, Taiwan -- Applicants for old-age pension annuities claimed some NT$76.8 billion in October and November last year after media reports on the financial status of the Labor Insurance Fund triggered a run, official statistics showed yesterday.
January 3, 2013, 12:02 am TWN
The number of applicants claiming pension annuities reached a high of 33,000 in October and 25,200 in November last year, several times higher than the usual 4,000-8,000 claimants per month, according to figures released the Labor Insurance Bureau yesterday.
Legislators yesterday held an interpellation session with Council of Labor Affairs (CLA) Minister Pan Shih-wei (潘世偉) regarding reform issues with the labor insurance systems. After it was revealed near the end of last year that the fund would go bankrupt by 2017, applicants flocked to the Bureau of Labor Insurance (BLI) to claim their dues, costing the CLA more than NT$80 billion in two months.
Lawmaker Liu Chen-kuo slammed the CLA for not providing correct information to the public, accusing Pan of saying that the expenditures of the fund amounted to NT$20 billion last year. “This is ridiculous,” Liu said. “The CLA is obligated to inform the public of these drastic changes.”
According to the BLI, 33,000 applicants claimed their old-age pensions in a lump sum in October, while the number reached 25,200 in November, totaling an expenditure of more than NT$70 billion in lump-sum withdrawals.
Although old-age pensions can be collected in two ways — lump sum or annuities — the CLA told claimants that choosing payments in annuities was more cost-efficient than the lump sum. The minister also repeatedly vowed that the fund would not go bankrupt, promising that officials were mapping details to reform the system.
Reform in Process
While lawmakers inquired over the reform of the insurance system, Pan explained that discussions were still in progress and that draft revisions should be finalized by mid-January. Pan explained that various forums were being held over the issue with professionals from multiple sectors.
When asked if the CLA would raise the premium rates, Pan answered that it was not likely, although he later added, “Nothing has been finalized, yet.” Pan explained that raising premium rates was not fair to the younger generation, especially when the labor insurance program is mandatory and their monthly salaries are not high.
When lawmakers asked if that meant income replacement rates would decrease, Pan noted that the CLA will try to work in a direction that doesn't cut the replacement rate.
“The most important thing is for the system to maintain its function,” Pan said. The older generation wishes for the income replacement rate to stay the same; but if we don't adjust the replacement rates we will need to increase the premium rate drastically, Pan said. How to strike the balance will be our biggest challenge, he added.
Misunderstanding Over Fund
While people have grown anxious over the failing labor fund, National Chengchi University professor Kuo Ming-cheng said that the public and media misunderstand it.
As a member who participated in the pension annuity reform system, Kuo explained that most people mistake the social welfare benefit as a private insurance program, due to the mass coverage from the media. He described it as people scaring themselves based on inaccurate information.
Earlier last year, Minister Pan reminded people that the labor insurance pension program is a social welfare benefit system that ensures minimal protection for people's livelihoods. He urged the public to join other private labor programs to better ensure their futures after retirement.