Pension reform in Taiwan is undoubtedly a sensitive and complex issue. Since President Tsai Ing-wen (蔡英文) took office in 2016 and promoted the reform, there have been a series of vehement protests and debates over the issue.
The road to pension reform is a thorny one, yet it is vital to protect the nation’s social fairness, justice and long-term fiscal health.
The latest figures show that among Taiwan’s public finance expenditures, the proportion of pension payments for civil servants is rising every year and has become a great source of concern for the nation’s fiscal health. Each political party has expressed the importance of reviewing the pension system regarding this emerging reality, but there are branching opinions on the concrete solutions and paths forward.
In the near term, as the Chinese Nationalist Party (KMT) in this year’s legislative election won a slim majority in the legislature, it has proposed a bill to stop cuts to civil servant pensions, sparking broad concern and debate in society. New Taipei City Mayor Hou You-yi (侯友宜), who ran in this year’s presidential election as the KMT’s candidate, vowed to conduct a comprehensive review of the retirement compensation system, marking a new high point in the issue.
However, in doing so, this promise and the bill have been viewed as a kind of “anti-reform” signal, undoubtedly giving Taiwanese pause to consider the issue more deeply. Taiwan’s fiscal policy situation must be carefully reviewed. People must also conservatively use realistic data to support their positions. Taiwan’s fiscal policy structure cannot withstand a retreat from pension reform.
Taiwan’s fiscal debt has already surpassed an astonishing amount, the latest Ministry of Finance report shows. Disbursements for civil servant pensions are a heavy burden to public expenditure. A look back at the system’s unfair and unreasonable state prior to 2016 shows that pensions were nothing but a massive millstone around the necks of younger generations and social groups.
Although pension reform is a difficult process, it must be done to protect the continuity of the nation’s fiscal policy, social fairness and justice.
Any measures that attempt to stop or reverse pension reform are utterly irresponsible.
Taiwan’s pension fund would face insolvency within about a decade if no reforms are made, Ministry of Finance data showed.
Reversing the reform would not only impact retired civil servants and educators receiving payments today, but would also create enormous economic pressure on younger generations.
In the international community, many countries face similar pension reform challenges. Several countries — from Japan to South Korea to many European countries — are striving to find a path between balancing pension payments and national fiscal health. Taiwan cannot falter from this path, much less retreat from it due to shortsighted political calculations.
As such, Taiwan’s political parties and legislators should stand up for the nation’s long-term benefits and put a high level of consideration into this problem.
Pension reform is not only about the continuity of fiscal policy. It is about the implementation of social fairness and generational justice. There is no path of retreat for Taiwan on this issue.
Anyone who tries to turn the clock back on pension reform would be seen as a betrayer of Taiwan’s future.
The nation’s pension reform must be carried out to the very end, for everyone’s welfare and for Taiwan’s tomorrow.
Fang Kai-hung is an assistant professor at Taipei University of Maritime Technology
Translated by Tim Smith
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