A Step in the Right Direction: Hope for Pension Reform

A Step in the Right Direction: Hope for Pension Reform
China Times editorial (Taipei, Taiwan, ROC)
A Translation
January 31, 2013

Summary: Yesterday President Ma held a press conference at the presidential palace. He invited Premier Sean Chen, Legislative Yuan Speaker Wang Jin-pyng, Examination Yuan President Kuan Chung, and others. He explained the general outlines of the government's pension reform program. Everyone has high hopes for the pension reform express train. He gave the order to begin implementation.

Full text below:

Yesterday President Ma held a press conference at the presidential palace. He invited Premier Sean Chen, Legislative Yuan Speaker Wang Jin-pyng, Examination Yuan President Kuan Chung, and others. He explained the general outlines of the government's pension reform program. Everyone has high hopes for the pension reform express train. He gave the order to begin implementation.

Many people are concerned about the details of the pension reform program. Who will be affected? How large will the impact be? This reaction is perfectly natural. But we are more concerned about the how. Compared to other policy making fiascoes over the past six months, this reform was carried out in a remarkably deft manner.

First of all, this reform was not the product of a handful of civil servants gathered in a conference room. Before the first phase was announced yesterday, the Executive held 124 seminars. As we understand it, even after yesterday's announcement, the government continued holding seminars eliciting the views of the public.

Some people are criticizing the first phase of the pension reform program. They are saying it includes no details. They are even implying that the lack of details means a lack of commitment to reform. Such criticism is worse than unfair. It is misleading. This phase is only supposed to indicate a general direction. Many details must await the next gathering, when they solicit the views of all parties. Only when a consensus forms, will the program be made into law. This is the correct procedure. The reason is simple. This reform is important. It cannot be a decision arrived at by a handful of officials, then rammed down everyones' throats. Major policy reforms must be submitted to everyone in advance, in order to solicit their opinions.

We hope the seminars held between now and April will invite reform groups or their representatives. We hope there will be close coordination. We hope that once the agencies in charge hear these opinions, they will not dig in their heels, but instead make any needed changes.

Secondly, regarding labor insurance, we applaud the government for not treating the outsourced actuarial report, which provoked public panic, as gospel. This newspaper has mentioned this before on its editorial page. The conclusion of the actuarial report is based on numerous assumptions. The most significant were interest rate assumptions. When interest rates were low, the assumption was that interest rates would always be low. But this was overly pessimistic.

Based on assumptions of low interest rates, the labor insurance actuarial report's target rate was 27.8%. But a preliminary version of the Executive Yuan's pension reform plan sets the ceiling at 19.5%. This is a far more reasonable figure than 27.8%. We applaud the Executive Yuan's professional and unhurried attitude.

We hope that during the coming months coordination continues, and that details of the policy will continue to emerge. We hope the Examination Yuan, which is responsible for the Public Service Pension, has the same understanding, and makes sound decisions. The outsourced actuarial report included hidden liabilities within the 18% preferential interest rate. It made long term discount rate assumptions for the next three to five decades. It used the average yield of 1.8% for 20 year government bonds in 2011. But who can say that the interest rate will be that low for the next three to five decades? For example, U.S. 10-year government bond yields over the past 50 years has been an average of 6.5%. That is much higher than this number.

Currently interest rates are low. Using ultra low discount rates to estimate future government liabilities, will lead to number inflation. The calculated financial risk will be exaggerated. Using these figures to make decisions is premature. This is also true for the Public Service Pension Fund actuarial report, and premium rates in the civil servants and public school teachers actuarial report. The ROI for the next three to five decades is set at 3.5%. This estimate is probably low. We hope the Executive Yuan will consider the views of all parties, and arrive at a sound decision.

We would like to say something on behalf of the government regarding pension reform for civil servants and public school teachers. After the Ma administration took office, it made five changes. These are changes that the opposition DPP boasted it would implement for several decades. But during its rule it implemented almost nothing. This includes the 2010 civil service retirement system, which was changed from the "75 system" to the "85 system." This includes setting a ceiling on the retirement income replacement rate for civil servants. This includes the January 2010 cancellation of tax exemptions for primary and secondary school teachers and military personnel. This includes lowering the ceiling for political appointees preferential savings from 3.3 million to 2.2 million. This includes last year's cancellation of most military and government retirees condolence payments.

This experience, along with labor insurance reform, provide a ray of hope for the social security system. There is only one fly in the ointment. The government has not indicated how it intends to cope with the declining birthrate. It has not offered an incentive program to encourage childbirth. Such a program is urgently needed. The falling birth rate must be slowed. Doing so would help solve social security's structural problem. We hope the government will tackle this problem as soon as possible, in its next wave of plans.

踏出正確第一步 年金改革露曙光
    2013-01-31
    中國時報

　馬總統昨天在總統府親自召開記者會，邀集行政院長陳?、立法院長王金平及考試院長關中等，說明我國年金制度改革的基本理念和大方向，為各界期許甚高的年金改革列車，下達了啟動的號令。

　在這個時候，很多人關心改革的細節是什麼？哪些人會受到影響？影響的幅度有多大？有這樣的反應是很自然的，不過我們更重視的是進行的方式和程序。基本上，相較於過去半年多項政策的制訂過程而言，本次改革的進行方式可圈可點。

　首先，這次的改革並不只是少數公務員在辦公室裡討論，就產生了最終方案。在昨天宣布第一階段方案之前，行政院已經舉辦了一百二十四場座談會；而據了解，在昨天階段性的宣布之後，還會繼續辦座談會，聽取各界的意見。

　有些人批評第一階段改革方案只有方向，沒有確定的細節，甚至因此推論看不出改革的決心；這樣的批評不但很不公平，事實上更是誤導。現階段本來就應該只定大方向，很多細節要等到接下來蒐集各方意見、凝聚共識之後形成，然後再去立法，這才是正確的程序。原因很簡單，這個改革事關重大，絕對不容許只是少數官員做成決議，就強迫大家接受；重大政策改革本來就應該多方聽取各界意見。

　我們希望從現在到四月之間所舉行的座談會，一定要邀請被改革者的團體或代表參加，做好充分的溝通。相關單位在聽取意見之後，也請不要堅持己見，要作出必要的修正，當改則改。

　其次我們要肯定的是在勞保方面，政府沒有把先前引發恐慌的委外精算報告當作聖旨。先前本報社論已經提及，精算報告的結論是基於很多前提假設，其中攸關重大的就是利率的假設；在現在低利率時代，假設未來永遠都會維持低利率實在是過度悲觀。

　基於低利率的假設，那一份勞保精算報告中所建議的費率目標是二七．八％，但是我們現在看到行政院初步版本，費率上限會訂在十九．五％，這就是一個遠比二七．八％合理的數字；我們對於這種重專業、不躁進的態度表示肯定。

　我們希望在未來幾個月的溝通和細節政策形成過程中，主管公務人員退撫的考試院應當要有同樣的認知和態度，做出合理的決定。該機關委外的十八趴潛藏負債精算報告中，對未來三、五十年長期折現率的假設，是採用民國一百年度二十年期以上政府公債的平均殖利率一．八％。問題是，誰敢說未來三、五十年利率都會這麼低？例如美國十年期公債殖利率過去五十年平均數為六．五％，即遠高於此數。

　在目前低利率環境下，以此種超低折現率來估算未來政府負債，必然被過度膨脹，所計算的財務風險，必然被過度誇大，如果根據這些數字來做決策，也必然過度躁進。同理，公務人員退休撫卹基金精算報告，以及公教人員保險費率精算報告書，將未來三、五十的投資報酬率訂為三．五％，恐怕也是偏低的估計。我們希望該院能妥善衡量各方意見，做出合理決定。

　對於公教人員的改革，我們還要為政府講一句公道話。事實上馬政府上台以後，已經做了五項變革，這些是過去幾十年來反對黨口口聲聲說要做，但在其執政期間，幾乎是掛零的改革，包含：九十九年把公務員退休制度「七五制」改為「八五制」；為公務人員退休所得替代率設定上限；民國一百年元月取消中小學教師及軍人免稅優惠；領月退政務人員優惠存款金額上限由三百三十萬降到二百萬；去年年底取消大多數軍公教退休人士的年終慰問金等。

　經過這樣的歷程，加上勞保這次也同步進行改革，我們相信可以為這些社會保險制度未來的前景，建構出一線曙光。這次改革方案中，唯一美中不足的就是政府沒有同時提出如何因應少子化、提高國人生育率的正面激勵方案。我們現在亟需這樣的方案，來降低少子化的速度，這對解決社會保險根本性的結構問題一定會有幫助，希望政府在接下來的進一步規畫中，能盡快推出。