PDF(2.7mb) - 國家政策研究基金會

Establishment of the Pension System in Taiwan 87
The Democratic Progressive Party won in six cities
and counties in 1993. The six and the city of Chiayi
began paying monthly subsidies in 1994. But a few
months later, they asked for subsidization from the central
government to continue their old age allowance
project. Their request was turned down. Subsequently,
these seven local governments either stopped payment
or reduced the amount of subsidies for lack of budgeted
funds.
Though not lasting, elderly pension allowance was
accepted as a policy objective. In 1994, the ruling Kuomintang
initiated a low-income old age allowance
program. Another program was launched in 1995 to
provide welfare allowances for old farmers. Chen
Shui-bian was elected mayor of Taipei in 1995. The
new Democratic Progressive Party mayor began paying
subsidies to physically and mentally disadvantaged
residents of the city in September 1996. All of a sudden,
the subsidization became the most important welfare
issue for political parties in election campaigns.
Chen won the presidential election in 2000. He
tried to have an elderly welfare allowance bill adopted.
The opposition Kuomintang and social welfare groups
did not support the bill. No support was given by the
Ministry of the Interior and the Directorate-General of
Budget, Accounting and Statistics (DGBAS). They
argued that because of financial difficulties and rising
unemployment, the new administration should not
launch a welfare program which entailed massive
funding.
In May 2001, on the first anniversary of his inauguration,
President Chen reiterated his determination to
pass the welfare act. The DGBAS opposed on the same
ground but the Ministry of the Interior made a U-turn,
proposing an elderly welfare subsistence allowance bill.
According to the bill, people 65 years old or older, except
the rich, would receive a monthly subsidy of
NT$3,000. An annual outlay for the payment was estimated
at NT$16 billion. There would be 440,000 beneficiaries.
The bill was adopted. An amendment to the act
was adopted in 2003. The NT$3,000 subsidy was made
available also to retired civil servants and teachers, servicemen,
and workers who enjoyed old age benefits or
received retirement pay. This was a significant policy
relaxation and more people benefited. By the end of
July 2005, the number of beneficiaries topped 740,000
and the outlay totaled NT$73 billion (with the subsistence
allowance payment to elderly indigenous peoples
included).
Problems of Old Age Allowance Payment
Before providing national pension insurance, the
government offered protection for the elderly, especially
those who were not entitled to any sort of retirement
benefit. Such protection took the form of subsidies.
Subsidization has posed two problems.
1. Increasingly Heavy Financial Burden
The government provided old age subsistence allowance
and welfare allowance for old farmers to help
those who were not covered by labor insurance or national
insurance for public functionaries and servicemen.
The funds needed were supported by the government.
The burden gets heavier as the elderly population
grows. In 2004, the government spent NT$24.19 billion
for elderly welfare subsistence allowance, NT$9.25
billion for allowances to low-income elderly people and
NT$32.1 billion for welfare allowances for old farmers.
The total outlay was NT$65.54 billion. It will go up as
the elderly population grows. The financial burden of
the government will get heavier. The situation gets
worse in an economic downturn. The government has
to resort to more borrowing. Public debt will increase.
2. Fairness of Welfare Subsistence Allowance
The elderly welfare subsistence allowance program
raises the question of fairness in resource allocation.
The Ministry of the Interior insists on excluding
the rich from the program. Currently, however, more
than 200,000 low-income households are not entitled to
the allowance because they are arbitrarily considered