Taiwan working on formula to cut labor pension payouts: Reports

TAIPEI (Taiwan News) – The government is working on a new formula to calculate labor insurance payouts which will lead to lower pensions, reports said Wednesday.
The Council of Labor Affairs recently reported that at the present rate, the labor insurance system might go bankrupt in 2027.
In order to quell public fears, the government was working on solutions to save the system, but they would result in lower pension payouts, reports said.
Instead of using just the salary during 60 months in an employee’s career as a basis to calculate the pension’s level, the average of the salary earned over the full career would be taken into account, reports said.
The Chinese-language United Evening News calculated that the new system might result in a cut of more than NT$3000 (US$102) per person per month. Some employees underreported the level of their salary with the exception of the 60 months they used as a basis for their pension, the paper said.
CLA Minister Pan Shih-wei said the Cabinet discussed measures Tuesday to prevent a massive pullout of laborers from the system. A workable solution to the labor insurance system should be found within three months, he said.
Pan admitted that the change in the formula could be one of the changes under review, though he promised that he would not drop the rule that the insured could begin receive monthly pension payments after 15 years of contributions to the system.
In order to assuage laborers’ fears, the CLA wanted the Cabinet to consider adding a clause saying that the government would be ultimately responsible for the health of the system, just as it was for the pensions for public employees and veterans, the United Evening News reported.
Opposition Democratic Progressive Party lawmaker Chao Tien-lin said that in his Kaohsiung constituency, there had been a wave of questions from the public about the condition of the labor insurance system. The questions were a prelude to demands to pull out of the system, he warned, adding that local insurance offices posting notices on their windows to calm workers would not help.
Ruling Kuomintang lawmaker Johnny Chiang encouraged the CLA to hurry up with solutions to the crisis because the government stood to lose the confidence of workers. KMT whip Wu Yu-sheng said the Cabinet’s promise to find a solution within three months neglected to address the fears of an estimated 9.8 million people likely to be affected. If Thursday’s regular weekly Cabinet meeting failed to come up with concrete measures, his caucus would present proposals of its own to end the crisis, Wu said.
At the Legislative Yuan Wednesday, Pan repeated government assurances that the system would not go bankrupt and that the Cabinet would save it. He also warned that its problems had accumulated over decades and that a solution could not just appear in a short space of time. A proposal to end the financial problems would have to include a range of measures, and the recalculation of the basic premium formula was one element to be considered, Pan said.
In a radio interview, Premier Sean Chen said that employers also bore the responsibility to help the government solve labor insurance problems. However, if the system became more expensive for employers, they might have a hard time finding extra money for wage hikes, he warned, explaining why the Cabinet needed to take a cautious approach.