Vice premier pans DPP's pension reform draft
By Ann Yu ,The China PostTAIPEI, Taiwan -- Vice Premier Jiang Yi-huah (江宜樺) slammed the main opposition party's pension reform proposal yesterday, saying that it would put a greater burden on laborers, following the Cabinet's proposals on Wednesday.
February 1, 2013, 1:01 am TWN
In a radio interview yesterday morning, Jiang commented that he was surprised by the Democratic Progressive Party's (DPP) version. Although the DPP demanded a lower monthly premium rate of 16.2 percent, it suggested that workers contribute 40 percent of the payment, double the Cabinet's 20-percent figure, Jiang said.
The Cabinet's version included dividing monthly insurance payments into a 70-percent contribution from the employers, 20 percent from the workers and 10 percent from the government.
“What the DPP proposed is that workers pay 40 percent and employers contribute 60 percent,” he said. “What kind of plan is this where the government does not have to take part?”
According to Jiang, the DPP's version was designed to sustain the funds for 20 years more while the Cabinet drafted the reform with 30 years of sustainability in mind.
According to Council of Labor Affairs (CLA) Minister Pan Shih-wei, a worker with a monthly income of NT$30,000 would need to pay 20 percent of the monthly premium — about 19.5 percent of his salary — at NT$1,170. However, Pan said, the DPP's version would mean that the worker pays NT$1,950 under a premium rate of 16.25, with a 40-percent contribution. That's NT$23,400 a year, Pan said, a 66-percent increase from the Cabinet's version of NT$14,040 a year.
DPP Chairman Su Tseng-chang fired back at the vice premier, asking, “Did you not understand your own version or our version?” Su said that he was surprised that Jiang would make such remarks. “He criticized the DPP's version without even understanding the details first, which is very inappropriate,” Su said.
According to Su, the DPP's version did not mean that a worker's contribution to the premium would rise immediately to 40 percent. He said that most countries around the world with retirement insurance programs have the premium rate divided among workers with 40 percent and employers with 60 percent. But, Su added, these can all be negotiated.
Plan B more Acceptable
While the Cabinet has proposed a plan A and plan B for the reform of the income replacement rate, Pan said that most labor groups prefer plan B. According to the Cabinet's reports, plan A involves cutting 30 percent of a retiree's pension income after seven to eight years of payments. Plan B involves reducing the original percentage base of 1.55 percent to 1.33 percent for applicants who receive a monthly pension above NT$30,000.
Plan B is more accepted because most labor groups agree that the change doesn't influence too many people and that it is fairer, Pan said.
He added that many, people including labor groups and employers, all understand that raising the premium rate is essential for the funds to keep running.