Financial Effects and Intergenerational Inequity of Pension Reform in Taiwan

Jennifer L. Wang, Department of Risk Management and Insurance, National Chengchi University
Hong-Chih Huang, Department of Risk Management and Insurance, National Chengchi University
Yen-Chih Chen, The Bachelor's Degree Program in Financial Engineering and Actuarial Science, College of Finance, Feng Chia University
Mark, Hui-Heng Cheng, Department of Risk Management and Insurance, National Chengchi University

Abstract

The pension system in Taiwan faces various challenges caused by the rapid aging of the population and severe underfunding of pension funds. This study examines three crucial aspects, including (i) inconsistent pension benefits between occupations, (ii) intergenerational inequity, and (iii) unsustainability of pension funding. These effects have significant financial effects on pension reform in Taiwan. The results show that the difference of money's worth ratios between generations is larger than that between occupations. The government should quickly implement pension-reforming policies to resolve the intergenerational inequity and establish a sustainable pension system. In addition, to enhance retirement income security, individuals should also be required to contribute more to their occupational pension schemes and increase their retirement savings. 


Keywords

pension reformretirementsocial insurance


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