Will Taiwan Be The Next Greece?

Will Taiwan Be The Next Greece?
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The generation that is receiving pension now is overspending and has already maxed out the welfare of the next generation to the point they are even leaving debt to them.

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On September 3, Minister of Finance Zhang Sheng-he said the pension reformation is imperative because the income replacement rate is over a hundred percent for retired civil servants, allowing those in retirement earn more than those working.

UDN reports, Zhang said in a speech held by the Southern Joint Services Center in Kaohsiung that our nation has a potential financial deficit over NT$ 17 trillion (approximately US$ 523.08 billion), including a debt of national pension. With the rapid aging speed of our society, the government spends increasingly more on the Pension and Consolation Funds each year, including the nine main insurances, which is more than NT$ 600 billion (approximately US$ 18.46 billion). The finance of our country will reach a choking point if we don’t reform the pension system.

He takes his wife, a retired teacher, as an example. She earned NT$ 64,000 (approximately US$ 1969.24) monthly when she was teaching junior high school. But after retirement, she gets NT$ 4,000 (approximately US$ 123) more than she used to per month.

Zhang says, “I can see the financial problem of our country from my wife’s example.”

CNA reports, apart from the high income replacement rate, the extending life expectancy also escalates with the burden of pensions. Zhang says the calculation formula of Civil Servants Pension and Consolation Funds is based on the average life expectancy of 70-year-olds. It’s now common to see elders over 80 years old walking on the streets, and if we don’t fix this problem, the government will definitely go bankrupt.

The officials of the National Treasury Administration reveal that the central government listed a budget of around NT$ 1.9596 trillion (approximately US$ 60.29 billion) this year. Among the annual budget, a variety of social insurances, the educational budget and personnel budget and other statutory obligation expenditures take up a proportion of more than 70 percent.

Li Yen-rong, the legislator candidate representing the third Taipei constituency, points out in an article that the National Pension System should benefit both the government and its citizens. The system in fact relies on tax collected from the people of this country, so the proposal of the reformation should not divide the people into different occupations, but from the standpoint of integrating citizens.

On the other hand, the reformation should also pursue justice between generations. One of the main problems of the current pension system is no matter which occupation you belong to, you pay little and get a lot. So the generation that is receiving pension now is overspending and has already maxed out the welfare of the next generation to the point they are even leaving debt to them.

As we face the retirement of baby boomers and the super-low fertility rate, the situation will undoubtedly get even worse.

Translated by June
Edited by Olivia Yang

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