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Millions of people to gain from national pension plan

Millions of people to gain from national pension plan

The Democratic Progressive Party-led Cabinet approved a draft National Pension Law that could cover basic living expenses for elderly citizens and ease the long-term fiscal burden of Taiwan's aging society.
Premier Su Tseng-chang (蘇貞昌) stated that the introduction of a national pension system to provide a complete economic security system for disadvantaged and elderly citizens was one of the major campaign promises issued by President Chen Shui-bian (陳水扁) in the run-up to the 2000 presidential election and "is an important link in the construction of a social security system and in realizing equity and justice in the wake of the transfer of power."
The premier said that Taiwan is a rapidly aging society in which the numbers of elderly citizens is rising quickly and that the establishment of a "lasting and sustainable" comprehensive national pension system is urgently needed to rationalize the system of monthly subsidies to indigenous people, elderly farmers, senior citizens and other groups, and to reduce the long-term national fiscal burden.
The premier lauded Minister without Portfolio Lee Wan-yi for his efforts in preparing the draft bill.
Cabinet Deputy Secretary-General Chen Mei-ling told reporters after the meeting that, if approved, the new bill would offer "three wins."
Chen said that the new system would incorporate the existing subsidies and would "not affect the rights" of existing beneficiaries, would provide returns of over 500 percent for participants on their contributions and would gradually lighten the fiscal burden on the government and taxpayers and avoid "leaving debts to the youth" to pay for the pension system.
According to Minister without Portfolio Lee Wan-yi, the proposed law - the second national pension bill to be submitted by the DPP government - was a "great social engineering project" that aimed to include the best features of the proposed alternatives in Taiwan and learn from the experiences of national pension systems in Sweden, England, Denmark and other advanced nations.
Lee estimated the number of persons that could benefit from the system at over 3.5 million and said that the program was "softly compulsory" in that there are no penalties for not participating, but "many soft incentives are incorporated to encourage participation," including mechanisms to ensure that persons already over 50 or 60 years of age can enroll and benefit.
Lee said the required contribution of enrollees in the national pension fund during its first year will be based on the basic wage, but that the basis for any increases in monthly contributions after the first year will be based on changes in the consumer price index.
Assuming a 9.1 percent rise in the basic wage from NT$15,840 a month to NT$17,280, the monthly contribution of six percent of the basic wage for a 25 year-old will be NT$1,037 of which citizens will pay 60 percent or NT$622 a month and the government will cover 40 percent or NT$415.
Under the scheme, the government will cover 40 percent of the monthly contributions of ordinary citizens, 100 percent of the fees of low-income households (35 percent from the central government and 65 percent from city or county governments), 100 percent for citizens suffering from major or medium disabilities and 50 percent (split equally between the central and local governments) for less seriously handicapped citizens.
After 40 years, the total amount contributed by the enrollee will be NT$298,560, but the enrollee could look forward to receiving a monthly stipend of NT$7,603 and a total of NT$1.55 million over 17 years for an average life if he or she lives to 82.
Lee added that even if the Cabinet adopts the lower 7.5 percent hike in the basic wage to NT$17,040, enrollees could expect to contribute NT$613 a month and receive NT$7,498 monthly subsidies after they reach 65, or NT$1.53 million if they live to 82.
Lee said the Cabinet hopes the bill can be approved "as soon as possible" by the Legislature and that a year of institutional preparation and education would precede introduction of the new national pension system on January 1, 2009.
Lee said the new pension system would be primarily aimed at disadvantaged citizens and others who are not employed or are self-employed or otherwise not covered by other pension arrangements.
"The objective is to provide basic funds for food, clothes, transportation and other fundamental needs for elderly citizens in addition to other programs," said Lee, who noted that the government's "10-Year Care Program" will establish a system under which the cost of caring for disadvantaged or poor elderly citizens will be completely covered.
"We hope everyone can understand that the Executive Yuan's version of the National Pension Law has been designed with the goal of finding the most feasible way to ensure the rights of all subsidy recipients, realize guarantees for the basic livelihood of elderly citizens and ease the fiscal burden within the environmental limitations in Taiwan," Lee stated.
Lee stated that the National Pension Fund would be managed by the Labor Insurance Bureau under the Council of Labor Affairs (勞委會) as part of an effort to unify the administration of the various welfare systems that includes a draft bill to turn the labor insurance system into an annualized system with monthly payments.
Lee said that personnel costs would be "minimal" since the fund will be administered by the existing Labor Insurance system, but acknowledged that the additional cost could be as much as NT$30.9 billion in 2009 along with the annual budget allocations of NT$80 billion to NT$90 billion for the various subsidy programs.


Updated : 2021-08-01 06:11 GMT+08:00