Building a social security system that reflects the needs of ROC citizens is a policymaking priority for the government and an important part of ensuring Taiwan’s sustainable development, according to the Council for Economic Planning and Development Nov. 13.
The CEPD statement follows the findings of a specially appointed task force charged with assessing the health of Taiwan’s social security system. Identified problems include escalating hidden liabilities in state insurance funds, incomparable entitlements for different professions, and discontinuity of benefits for those changing jobs.
“Changes in Taiwan’s economic development, demographics and labor market situations over the years have exposed severe flaws in the system,” a CEPD official said. “Adjustments must be made if it is to meet the government’s goal of supporting those in need going forward.”
The council is mulling a comprehensive overhaul of the system based on several core principles. One of the most important is maintaining a defined-benefit annuity plan for those without retirement funds, while gradually switching to a defined-contribution pension system for retirees.
In addition, structural adjustments to state insurance funds’ reserve ratios will be made to maintain adequate cash flow and ensure fair contributions by different generations, the official said.
“The pension systems for labor and civil servants, including military personnel and school teachers, are also set for review with a focus on narrowing the gap between entitlements to achieve greater social equity.”
Various kinds of social insurance and pension systems were implemented by the government in Taiwan from 1950, with an annuity plan launched in 2008 to include those without retirement benefits.
The CEPD will incorporate the task force’s findings into a social security system reform proposal expected to be sent to the Cabinet for approval in early 2013.