What HK can learn from Taiwan’s pension fund chaos
Taipei Mayor Ko Wen-je was among those assaulted by protesters outside the parliament on Wednesday.
The violent protest was triggered by President Tsai Ing-wen’s plan to reform Taiwan’s hemorrhaging pension system, which is expected to go bankrupt within three years due to excessively high benefits.
Concerned that their retirement income will be cut, a large number of retired civil servants, teachers and servicemen have tried to stop lawmakers from entering the legislative complex in central Taipei. Ko became a target probably due to his high-profile support for the reform.
Tsai has vowed to press ahead with the reform, saying she won’t tolerate violence.
Under the current system, civil servants, teachers and servicemen receive far more benefits than the average Taiwanese workers.
The former group get a monthly pension income equivalent to 85 to 95 percent of their final salaries, compared with around 40 to 50 percent for average retirees.
These public sector retirees are also entitled to a special savings rate of 18 percent interest for up to NT$2 million (US$65,888). The related interest expenditure amounts to more than NT$80 billion a year, which is also covered by the pension fund.
Such large payouts are no longer sustainable, thus the need for a more sustainable pension system.
Full Content: ejinsight
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