Pension reform necessary, but hurts the Kuomintang

The China Post news staff

President Ma Ying-jeou is a courageous man. He has tackled the nation’s soon-to-go-bankrupt pension system, which his predecessor Chen Shui-bian dared not tinker with for fear he would bankrupt his Democratic Progressive Party.

One week ago today, after months of growing public fears of the bankruptcy of Taiwan’s pension system, Ma unveiled his pension reform plan to the nation, promising that the system would be safe for 30 years. He said that there should be no more worries thanks to his reform. To accentuate his wholehearted support for the reform, Ma announced that he would not open a special Bank of Taiwan savings account to enjoy the 18-percent preferential interest offered to retired government employees. The rate has been the main target of public criticism against what the opposition party calls the fat retired brass hat. Ma’s announcement, aimed at setting an example for top government officials to follow, has been blasted as merely for show because, as a retired president, he will enjoy eight years of fat paychecks worth millions of New Taiwan dollars before he is entitled to a meager monthly interest payment of NT$23,000 (less than US$800). Very few top government officials have followed suit. According to the Ma plan, the preferential interest rate that government employees and military personnel will enjoy after retirement will be cut to 7 percent by 2020 with the addition of a floating rate fixed by the Bank of Taiwan; however, the total should not exceed 9 percent. The lowering of the rate will affect at least 630,000 men and women. Many more people will be affected if the plan — which Ma said is yet to be finalized before it becomes a government-sponsored bill in April — is implemented as it is. They are the 9.87 million wage earners covered by the labor pension insurance program. They will have to pay more in premiums and receive much less than they currently do.