National Pension95208020 田鵑華 95208040 陳芷羚95208045 蕭伊伶 95208049 劉佩琪95208051 陳善平 95208055 蔡曜蓮95208058 林昕儀 95208063 黃詩芸95208096 吳亭穎

National Pension

1. Introduction

2. Comparison– Japan– German– Sweden

3. The Problems and Solutions of Taiwan’s Pension System

Introduction

Introduction to National Pension

1. Purpose

2. Extra Effects

3. Reasons

4. The Insured

5. Insurance Premium– Calculation Method A– Calculation Method B

6. Risks

The Purpose of National Pension

1. To implement the national insurance system

2. For our aging society

Extra Effects of National Pension

1. To stop candidates from making empty promises of more allowances

2. To integrate • Old-Age Citizens' Welfare Allowance,• Old-Age Indigenes' Welfare Allowance,• Old-Age Farmers' Welfare Allowance, etc

Reasons to Enforce Pension System

1. To avoid the problems caused by paying all premium at a time, which may make money used inappropriately

2. The amount of premium can be adjusted with inflation rate and earned-income rate, which can avoid it being affected by inflation

The Insured1. Age :25~65

2. Residency : over 25 years with their

household registered in R.O.C.,

3. Without other pension systems

(labor insurance, farmer's health insurance, government employee's insurance…)

Main target ：students, housewives, the unemployed,

the self-employed, etc

Insurance Premium

1. Monthly insured amount

2. 6.5% of minimum wage ($17,280) for the first and the second year

(the government afford 40%, and the insured afford 60%) $17,280*6.5%*60%=$674(per month)

3. After that, the rate will be adjusted according to the result of calculating carefully. The limit of it is 12%.

Identities of the Insured

The ratio of the amount paid by the insured thems

elves

The ratio of the amount paid by the government

General people 60% ($674) 40% ($449)Low-income family 0 100% ($1,123)

whose incomes do not reach

the standard

1.5 times less than the living expenses in

that year

30% ($337) 70% ($786)

1.5 times more but 2 times less

than the living expenses in

that year

45% ($505) 55% ($618)

The disabled

serious $0 100% ($1,123)between

serious and slight

30% ($337) 70% ($786)

slight 45% ($505) 55% ($618)

Payment of Old-age Pension Benefit

1. Method A ＝（ Monthly Insured Amount × Insurance coverage year ×0.65% ） +3,000

(suitable for those who are between 24 and 64 years old, unable to pay the premium for 40years)

2. Example:

a 40-year-old man has to pay the premium for 25 years so that he totally afford more than $290,000; however, after 65 years old, he can get $5,808 per month.

$17,280*0.0065*25+$3,000 = 5,808

Payment of Old-age Pension Benefit 1. Method B ＝ (Monthly Insured Amount × Insuran

ce coverage year × 1.3%)

(suitable for those who are under 24 years old, able to pay the premium over 40years)

2. Example:

a 25-year-old man has to pay $515,082 within 40 years, and after 65 years old, he can get $8,986 per month. If he can live to 82 years old (Taiwanese life expectancy), he can get $1,833,062 totally.

17,280*0.013*40 = $8,986

Risks to the Insured of National Pension1. The uncertainties --- the insured are not sure how

much they can totally get in the end2. Example:

– Lee had paid the premium $515,082 in total for 40 years, but he died after having his national pension $8,986 for the first month.

– His family got funeral benefit $86,400 and had survivor’s pension payment $4,493 for a month only because of losing the qualification (his spouse married another man).

– Therefore, he and his family totally got

$86,400 + $8,986 + $4,493 = $99,879 – He paid $515,040 but only got 99,879 back. – To sum up, he lost $400,000, and that was about

80% of the amount he paid.

Japan

Japan

1. Introduction of Pension System

2. Benefit

3. Problem

4. Reform

Pension System

Benefits

1. Old-age Basic Pension

2. Disability Basic Pension

3. Survivors’ Basic Pension

4. Widow’s Pension

5. Lump-sum Death Benefit

Problem

1. Silver century

(low birth rates & aging population)

2. Foreigners benefit

Reform

1. Increase tax rate

2. Change the benefit formula

The German Pension System

German

• Introduction

• Feature

• Problems Today

• Action Taken

Introduction

1. The first formal pension system in 1889

2. Retirement insurance

3. Pay-as-you-go system

Feature

1. Most generous system

→ High replacement rate: 70% (U.S: 53%)

2. Largest item in the social budget• 21% of public spending• 11.8% of GDP

Problems Today

1. Low birth rate: 1.4 births per woman

2. Aging population (2050: worker: pensioner ratio = 2:1, today 5:4)

3. Early commence of retirement

4. Increasing of unemployment

Action taken

1. Age of retirement: 672. Increase contribution 3. Decrease the replacement rate 4. Private pension

The Swedish Old-Age Pension System

Sweden

1. The Pension System Comprises of three Parts

2. Two Necessary Conditions3. Current Challenges

1. Guarantee pension -For those who have a low or no income.

2. Income pension -16 % of the pensionable income

3. Premium pension -2.5 % of the pensionable income

The Pension System Comprises of Three Parts

Two Necessary Conditions

1. Stable economic growth rate

-3% at least

2. High tax rate

The Dual Income Tax

0%

10%

20%

30%

40%

50%

60%

Earned income Capital income

National tax on capitalincome

National tax on earnedincome

Local tax on earnedincome

Erik Norrman - School of Economics and Management

Social security

Indirect taxes

Direct taxes

Taxes in percent of GDP

Current Challenges

1. Discourage work incentives

2. The impact of aging population

3. The financial stability

Lurking Problems and Countermeasure

1. Aging Society – Data– Difficulties– Solutions

2. Foreigners Benefit

3. Financial source

4. Payment System

5. Declining Labor Force Participation

Lurking Problems and Countermeasure

Aging Society-Data

Country Over the age 65 arrived at the ratio of the population  The required number of years

7% 10% 14% 20% 30% 7%-14% 10%-20% 20%-30%

USA 1942 1972 2015 2034 － 73 62 －

Germany 1932 1952 1972 2009 2036 40 57 27

UK 1929 1946 1975 2026 － 46 80 －

France 1864 1943 1979 2020 － 115 77 －

Italy 1927 1966 1988 2007 － 61 41 29

Japan 1970 1985 1994 2005 2024 24 20 19

Taiwan 1993 2005 2017 2025 2040 24 20 15

Korea 2000 2007 2017 2026 2040 17 19 14

Singapore 2000 2010 2016 2023 2034 16 13 11

Aging Society-Difficulties

1. Rapid increase in pension payments

2. Aging population and poor adjust mechanism

3. Reducing pension payments due to the crisis of pension hollowing out

Aging Society-Solutions

1. Promoting the employment of the aged and enhancing labor force participation rate of middle-aged

2. Rate adjustment mechanism to institutionalize  

3. To strengthen the wishes of the people to pay (to join) of an annuity

4. Early planning of the government's financial source of funds  

Foreigners Benefit

1. Difficulties

2. Solutions ： National Insurance Number

Financial Problems

1. High pension payment

2. Increase in non-wage labor costs

Countermeasure

1. Reduce subsidies paid by government

2. Increase individuals’ payment

3. Encourage individual’ savings

4. Cooperate with private pension system

5. To extend the retirement age

Payment System

• Problem: use nominal wages

• Solution: adjust to real wages

Declining Labor Force Participation

Labor Force Participation of Taiwan(%)

計

1998 58.04

1999 57.93

2000 57.68

2001 57.23

2002 57.34

2003 57.34

2004 57.66

2005 57.78

2006 57.92

2007 58.25

2008 58.28

The End

Thank You for Listening