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Commercial Times: Pension reforms inevitable

Commercial Times: Pension reforms inevitable

Greece's debt crisis demonstrates that a lucrative retirement pension system can eventually lead to a country's financial collapse. In Taiwan, the retirement pension system for military personnel, civil servants and public school teachers is far more lucrative than that of Greece. Before 2010, a retired secondary school teacher in Greece received 1,700 euros per month in retirement pension. After five years of Greece's austerity policy, the pension has dropped to 1,000 euros, which is about NT$34,000. By comparison, the retirement pension of Taiwan's retired elementary and secondary school teachers totals NT$60,000 to NT$70,000 per month, almost double that of Greece. The income replacement ratio of Taiwan's retired public sector workers reaches more than 90 percent, similar to Greece's before the eruption of the country's debt crisis. The average retirement age of Taiwan's public sector workers is 55, eight years earlier than Greece's 63. Taiwan's unfunded obligation has risen close to NT$18 trillion, which is 120 percent of the country's gross domestic product and three times the central government's debt. According to the 2014 Pension Sustainability Index compiled by Allianz Group, the five countries with the safest retirement pension systems were Australia, Sweden, New Zealand, Norway and the Netherlands. Before the debt crisis erupted in 2010, Greece was almost always at the bottom. After five years of austerity policy, however, Greece's ranking has risen to eight from the bottom. In 2014, Taiwan's ranking was 14th from the bottom, and its ranking is fast falling due to the failure of its pension reform efforts. The pension reform plan proposed by the ruling Kuomintang has been stalled in the Legislative Yuan for two years. With the presidential and legislative elections coming early next year, it is unrealistic to expect our politicians to begin reforms immediately. But we urge the presidential candidates of all parties to make a commitment to promote pension reforms. (Editorial abstract -- July 9, 2015) (By Y.F. Low)


Updated : 2021-09-21 00:39 GMT+08:00