Pension funds require urgent attention: Ma
By Adam Tyrsett Kuo ,The China Post
January 31, 2013, 12:06 am TWN
TAIPEI, Taiwan -- The nation's pension funds are like a train headed toward a cliff, President Ma Ying-jeou said yesterday.
Although there is no imminent danger of the funds going bankrupt during his remaining years in office, something has to be done now in order to ensure their sustainability, he said.
The president continued that although reform policies may not be popular with the public, they are imperative to ensure the welfare of generations to come.
Ma yesterday held a press conference on the administration's annuity reform strategy with Premier Sean Chen, Legislative Speaker Wang Jin-pyng (王金平) and Examination Yuan President Kuan Chung (關中) at the Presidential Office.
The financial challenges that the pension funds are currently facing go beyond the differences between pan-blue and pan-green ideologies, Ma said, adding that the nation needs to face these problems as one.
Although future retirees may receive less after the reforms, it is important to ensure the welfare of generations to come, Ma said, adding that after the reforms, the government will be able to guarantee 30 years of stability.
Ma also said that he will relinquish his right to the 18-percent preferential interest rate reserved for government retirees.
According to current regulations, public servants who were employed before 1995 have the right to deposit a portion of their pensions into government-designated accounts at an interest rate of 18 percent.
The issue has long been a point of dispute in the public sphere.
Ma to Receive NT$23,000 Less Every Month after Retirement
According to local reports, without the 18-percent preferential interest rate, the president after retirement will receive NT$23,000 less per month.
After Ma made his pledge, Vice Premier Jiang Yi-huah (江宜樺) said that he will also forfeit his right to the privilege.
In addition, Kuan said yesterday afternoon that he is willing to give up his right to the preferential interest rate.
During an interview with CNA, Kuan said he was happy that the president had decided to relinquish the privilege, and that he was willing to follow Ma's example.
Funds to Go Bankrupt between '19, '31 If Nothing Done: Ma
Over the past two decades, the population has aged significantly while birth rates have dropped dramatically, said the president, saying that as a result pension funds are under greater financial pressure.
The finances of the pension funds are like TNT sticks with lit fuses, Ma said, adding, however, that the metaphorical bombs will not explode within his term.
Yet if something isn't done now, the pension funds for both laborers and civil servants will go bankrupt between 2019 and 2031, Ma explained.
The president went on to say that the government will conduct comprehensive reviews of the nation's annuity programs every five years, and that it will make adjustments in accordance with changes, in order to ensure that the funds remain at an optimal state.
Ma said that a finalized version of the administration's reform strategy will not be submitted to the Legislative Yuan until April, and that the government will continue to gather more opinions during this time.