The Plights Of The Endowment Insurance In Taiwan And Its Causes And Enlightment

Taiwan has established a national coverage of the old-age insurance system since1950, but now the perfect old-age insurance system is in crisis:the disparity pay of theold-age insurance between the government employees and the labor caused strongdoubts about the fairness of the income redistribution. The labor endowment insuranceand the government employees endowment insurance have emerged within the financialcrisis, the labor insurance fund and the government employees pension fund is the mostserious. According to the most recent actuarial report of Taiwan government in2011,the two foundations, will meet a crisis of bankruptcy in the next twenty years.This paper takes the benefits disparity and financial crisis which appear in Taiwanendowment insurance as the research subject, and firstly introduces the developmenthistory and the basic framework of the endowment insurance system in Taiwan. Thedevelopment history including the establish of the endowment insurance during the1950-1984years and the improvement of the endowment insurance during the1984-2014years.The basic framework including the rate, payment conditions, paymentstandard, financial treatment and the competent authority of the government employeesendowment insurance,the labor endowment insurance, the national pension insuranceand the farmer insurance.Secondly, introduce the performance of the treatment disparity and financial crisisin Taiwan endowment system according to the reports published by Taiwan governmentand statistical data from the Taiwan authors. The treatment gap is mainly manifested inthe payment rate, retirement age, preferential interest rates of deposits and pensionreplacement rate between the government employees and the labors. The financial crisisis mainly manifested in the government employees retired pension funds and laborinsurance fund which are facing bankruptcy.Thirdly, explore the causes of the treatment disparity between the governmentemployees and the labors with the methods of theoretical analysis. The historical causesincluding: for the consolidation of the regime’s need to improve the governmentemployees endowment insurance treatment; for the implementation of export orientedeconomy to cut down the labor endowment insurance treatment; for controlling the development of the union, which led to the labor endowment insurance treatment cannot be improved for a long time. The structural causes including: the base payment andthe system structure of the government employees’ pension is superior to the labors’pension. Explore the causes of the financial crisis in labor insurance fund andgovernment employee insurance fund from the aspects of government intervention, theshort-term behavior of the ruling party, rate and payment imbalances, moral risk andpopulation aging.Lastly, through the analysis of the causes of the treatment disparity and financialcrisis in Taiwan endowment insurance system, we can get the enlightenment forimproving our endowment insurance. This enlightenment is embodied in two aspects:1.We should establish unified system of endowment insurance to avoid fragmentation:merger the government employees’ endowment insurance and the labors’ insurance assoon as possible; improve the existing old-age insurance system for urban and ruralresidents, to lay the foundation for a unified national endowment insurance in the future.2. Change the workers’ endowment insurance from defined benefit PAYG to fullyfunded to avoid the adverse effects of the moral risk、government intervention and theaging of the population. But consider that transform to the fully funded will producehuge reform cost,so this paper proposes to change the defined benefit PAYG to theNDC mode as a transition.