On the morning of January 30, President Ma Ying-jeou convened a press conference at the Presidential Building to introduce phase-one reform measures for the nation's pension systems. During the press conference, which was attended by Premier Sean Chen (陳冲), Legislative Yuan President Wang Jin-pyng (王金平), Examination Yuan President Kuan Chung (關中), and other senior government officials, the president expressed his hope that the government and the public will pull together in this work. He promised that there need be no worries about pension system solvency for the next 30 years, and that the next generation won't be sacrificed in the process.
The contents of the president's remarks are as follows:
Last year on November 21 I stood before the public and announced that the government would promote reform of the nation's pension systems. At the time, I pledged that a reform plan would be introduced in January of 2013. Today, I am here to announce that a draft proposal to usher in phase one of the reform has been adopted.
Everyone is aware that the laborers of Taiwan spend entire careers working hard on their production lines, and are the lifeline of the nation's economy. Meanwhile, the nation's military personnel, civil servants, and teachers stick to their posts and work on behalf of the nation. They form the backbone of the nation, and the foundation upon which the government relies to provide enthusiastic service to the public. The government is duty-bound to care for the needs of laborers, military personnel, civil servants, and teachers after they retire. Also, we have to acknowledge that the population has aged rapidly over the past 20 years, and the birth rate has declined quickly. Furthermore, contributions are low, retirement comes early, and benefits are generous. This has resulted in three major problems. First, the pension systems are inadequately funded. Second, payouts vary from one employment sector to the next. And third, payouts vary from generation to generation. The result is a heavy burden on the nation's finances.
Some people have likened the current financial health of the pension systems to a bomb whose fuse is getting shorter and shorter. However, this bomb will not explode prior to the end of my term in office. In other words, before I step down at the end of my term, the Public Service Pension Fund (PSPF) will not go bankrupt, nor will the Labor Insurance Fund. However, if we do not immediately begin adopting reform, the military personnel category of the PSPF will go bankrupt in 2019, while the education workers category of the PSPF and the Labor Insurance Fund will become insolvent in 2027. Meanwhile, the civil servants category of the PSPF is poised to go bankrupt in 2031. What I am saying is that within the next presidency or two, one of my successors will sooner or later run into this problem. Furthermore, society will be at unease until this issue is addressed.
The pension systems are kind of like a train approaching a bankruptcy cliff. If we don't take this opportunity now to undertake reform, the train will continue to move forward. The train will not reach the cliff during my term, but if we do not act early enough to erect a bridge, the train will fall into the cliff at some point after I step down. As president of the nation, I cannot sit idly by and pass this problem on to the next president. No matter how great the challenge, we have no choice but to reform the pension systems. We need to reform with everyone's future in mind. We need to adopt reform for the betterment of Taiwan. And we need to initiate reform for the security of our future generations.
Over the past two-plus months, the Executive Yuan and the Examination Yuan have worked together to address these problems. Vice Premier Jiang Yi-huah (江宜樺) organized a total of 124 public forums which were attended by elected representatives, scholars, experts, and both in-service and retired persons from the labor, military, and education sectors. Total attendance came to over 11,000 at these forums, which helped to forge a consensus in society. During the discussions, everyone embraced the principles of "fiscal soundness, social fairness, intergenerational solidarity, and pragmatic stability." At the same time, everyone realized that the reform needs to be "comprehensive, incremental, pragmatic, and transparent." Discussion focused on five broad topics: income replacement rates, insurance premium rates, benefit payment conditions, pension fund investments, and the responsibilities of the government. My administration has given close consideration to a wide range of public opinion, and it is upon that basis that I have come here today to announce the first phase of a pension reform program that has been very carefully thought out.
The purpose of today's press conference is to assure the public that the government is determined to reform the pension systems, and has in fact come up with a concrete and viable method to do so. At the same time, we reiterate to everyone our guarantee that the pension systems will absolutely not go bankrupt after the reform is instituted.
The reform proposed being announced today merely shows the general direction in which we intend to move. This is not to say that everything has been finalized. Now that phase one of the reform has been announced, we will embark on a period of communication regarding these measures and will continue to listen to the opinions of the public. We will also consider the suggestions that are aired. After these recommendations have been compiled, legal revisions will be forwarded to the Legislative Yuan in April for deliberations.
Every agency involved in this work has done its best to design the most appropriate measures for the reform proposal being announced today. However, this does not mean that things are perfect. At the same time, the reform must proceed incrementally, rather than all at once. It would be impossible to satisfy everyone, but as long as we resolutely seek intergenerational equity and steady progress, I am convinced that the efforts of the government today will put the public at ease about the future.
In the struggle for reform, the government cannot go it alone, for a pension system by its very nature involves both self help and mutual help. We must not think in terms of "your pension" or "my pension." Rather, what we are dealing with is "our pensions" and "the pensions of our children and grandchildren." The pension systems "must not and will not become insolvent." It is possible that future benefits may be slightly less than those paid out today. However, we can all rest assured about the safety of our pensions for the next 30 years. We can be sure that our children and grandchildren will be able to collect their pensions. Everyone must have confidence in the government, in the nation, and in the future. Simply stated, the government is promising peace of mind for the next 30 years, and is showing proper concern for future generations. This is the resolute pledge that the government makes in promoting reform of the pension systems.
Lastly, I would like to take this opportunity to pledge that after I retire I am willing to relinquish the preferential interest rate of 18% paid to retired public sector workers on designated savings accounts.
After concluding his remarks, the president accepted questions from the media. In response to a question about the controversy that has arisen from the fact that pension benefits vary from one employment sector to the next, the president indicated that over the past couple of decades, an aging society and a declining birth rate have caused underfunding of the pension systems and inequity in payouts across different employment sectors and different generations. The president pointed to 2011 as an example. Budgetary appropriations to the pension funds that year came to over NT$270 billion, which was quite a high percentage of the budget. This issue will need to be addressed regardless which political party is in power, he said. If the systems aren't changed, the percentage of pension appropriations as a portion of the total budget will continue to increase, he added, explaining that this is why reform is necessary.
President Ma furthermore stated that pension reform should reduce the gap in benefits among different employment sectors and should also ensure pension fund solvency for the next generation. Consequently, after the government digests the full range of public opinion, it will formulate a pension reform plan that closes the gap in benefits between different employment sectors, ensure the availability of pensions to the next generation, and ensure that the current generation can collect pensions for 30 years, he said. In the future, a comprehensive review of the systems will be carried out every five years, the president noted, and necessary amendments will be made in response to changing conditions and the level of returns on pension fund investments, thereby achieving systematic and modern pension systems that can stand the test of time.
With respect to criticism by laborers of proposed changes to the Labor Insurance Annuity (LIA) scheme, President Ma stated that while this scheme will remain solvent for a considerable period of time, the government has to alleviate public concerns by acting responsibly before the situation gets out of hand. In addition, he mentioned, the LIA not only concerns individuals, but is also very important to the public at large as well as future generations. The president stated that we cannot run away from this issue, adding that its resolution should transcend political affiliation or the issue of independence versus reunification. He expressed confidence that the public will gradually come to understand the situation and the reform thanks to the many frank discussions carried out between the government and the people.
The president then turned the topic to the government's future communication on these issues with the ruling and opposition parties and other sectors. He stressed that the Executive Yuan recently briefed the Kuomintang caucus in the Legislative Yuan on the pension reform plan. The Legislative Yuan is presently in recess, but this briefing was just the beginning of communications, not the end. In the future, the Executive Yuan will hold seminars and provide briefings on the reform it is proposing. President Ma remarked that the Executive Yuan has held 124 forums on reform of the pension systems and that a total of 20 legislators appeared at 27 of these events. He said that Vice Premier Jiang has also personally gone to the Legislative Yuan to communicate with lawmakers. The government, the president pledged, will absolutely not neglect work in this respect. "It will continue to carry out this work and make it a priority," the president said.