保險「飽」了沒？商業年金保險在我國老年經濟安全體系中可扮演的角色與功能 - 政大學術集成

全文

(1)國立政治大學亞太研究英語碩士學位學程 International Master’s Program in Asia-Pacific Studies College of Social Sciences National Chengchi University. 碩士論文. 立. Master’s Thesis 政治. 大. ‧ 國. 學. 保險「飽」了沒？商業年金保險在我國老年經濟安全. ‧. 體系中可扮演的角色與功能. Nat. io. sit. y. The Function and Commercial Pension Insurance and the. er. Elderly Economic Security System in Taiwan. n. al. i n C 學生：鄭為謙 hengchi U. v. Student：Cheng, Wei - Chien 指導教授：劉梅君 Advisor：Liu, Mei - Chun. 中華民國 103 年 12 月. December 2014 I.

(2) 摘要國人人口結構逐漸老齡化、提早退休、平均餘命延後、長壽風險等多重趨勢下，國人愈重視相關金融理財保險概念以及相關退休規劃等。而國內目前主要勞工保險體系則包含勞工保險、勞保退休金制度、國民年金保險等，而本研究主要欲探討商業保險能否補充勞工保險體系可能給付內容不足地方，以強化台灣勞工老年經濟安全。具體之研究目的包括探討現行台灣勞工相關保險與商業年金保險在制度及內容本質有哪些主要的差異性。其次，分析現行台灣勞工保險體制有哪些可. 政治大及趨勢為何。在研究方法方面，本研究主要擬針對不同資產層級一般大眾進行實立. 能缺漏。最後，探討商業保險業在因應現行台灣勞工保險體制下之未來發展方向. 地訪談，搭配文獻資料分析法，結論如下：. ‧ 國. 學. 1、勞工保險體制未臻完整得加強活絡現行保險運作機制加以解決. y. Nat. 面之考量. ‧. 2、現行勞保體制下，商業保險成為重要補充性保險，並隨著收入情形有不同層. er. io. sit. 3、社會保險制度未來可考量依不同收入階層發展相關配套措施 4、勞退新制修法草案中的勞工自選平台應有相關配套做法. al. n. v i n 5、聯合政府、企業、及民間法人力量等共同推動民眾投入退休生活規劃之完整 Ch engchi U 性. 關鍵字：勞工保險、勞保退休金、國民年金保險、商業保險. II.

(3) Abstract Facing multiple trends of gradually aging population structure, early retirement, the average life delayed, and longevity risk, more people pay attention to the concept of insurance and related financial plan related to retirement planning. There are labor insurance, labor pension, the national pension insurance, as well as national health insurance that provide social protection for occupation injuries/diseases, old age, health care needs, to name a few. But current social protection may be inadequate to guard against all kinds of life risks. Therefore this study is to investigate the general. 政治大 main objectives of the thesis 立are as follows:. public perception and expectations toward the current social insurance system. The. ‧. ‧ 國. insurance?. 學. 1. What is the difference between domestic labor insurance and commercial. 2. Analyze the deficiencies of the labor insurance, labor pension, national pension. sit. y. Nat. insurance.. al. n. insurance system?. er. io. 3. How does the commercial insurance address the deficiencies of the domestic labor. Ch. engchi. i n U. v. 4. Explore the future development or the trend of commercial insurance under the current labor insurance system? The study takes in-depth interviews with the general public of different assets levels. Literature reviews are conducted to explore the proper role that the commercial insurance can play and function given the domestic labor insurance system. Conclusions are as follows: 1. The labor insurance system was not complete and needs to further strengthen and activate the current insurance operation mechanism 2. The commercial insurance has become an important supplementary insurance III.

(4) under the current labor system, and its function differs to people with different levels of income. 3. The social insurance could be reconsidered according to different income groups to develop schemes to meet their needs. 4. Labor pension scheme offers voluntary options that need more policy attention and support.. 5. The collaboration of government, business, and foundations to make retirement planning as priority in people’s life.. 政治大 Keywords: Labor Insurance, Labor Pension, National Pension Insurance, 立 Commercial Insurance. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. IV. i n U. v.

(5) Table of Contents 摘要............................................................................................................................... II Abstract ...................................................................................................................... III Table of Contents ........................................................................................................ V Figures ........................................................................................................................ VI Tables.......................................................................................................................... VI Chapter 1 Introduction ................................................................................................ 1 1.1 Background and Motive ................................................................................... 1 1.2 Objectives ...................................................................................................... 12 1.3 Chapter Arrangement ..................................................................................... 13 Chapter 2 Literature Review .................................................................................... 15 2.1 Labor Insurance and Labor Pension Systems ................................................ 15 2.2 National Pension System ............................................................................... 24 2.3 Commercial Insurance ................................................................................... 33 2.4 Summary ........................................................................................................ 39. 立. 政治大. ‧ 國. 學. ‧. Chapter 3 Research Methodology ............................................................................ 41 3.1 Structure of the Research ............................................................................... 41 3.2 Research Method ........................................................................................... 42. sit. y. Nat. 3.3 Scope of the Study ......................................................................................... 44 3.4 Basic Information of Respondents ................................................................. 45 3.5 Design of Survey Questions........................................................................... 46. n. al. er. io. Chapter 4 Research Findings and Analysis ............................................................. 48 4.1 Discussion of the Current Status of Taiwan’s Labor Insurance System ........ 48 4.2 Exploring commercial annuities insurance under the labor insurance system. Ch. engchi. i n U. v. ....................................................................................................................... 62 4.3 Summary ........................................................................................................ 71 Chapter 5 Conclusions and Recommendations ....................................................... 74 5.1 Conclusions .................................................................................................... 74 5.2 Future Recommendations .............................................................................. 85 References ................................................................................................................... 86 Chinese................................................................................................................. 86 English ................................................................................................................. 89 Internet ................................................................................................................. 90. V.

(6) Figures Figure 1 Schematic Diagram of Taiwan’s Multi-level Security Insurance System for the Aging Economy ................................................................................ 8 Figure 2 Research Steps and Procedures ................................................................. 14 Figure 3 Types of Insurance – Social Insurance and Commercial Insurance ...... 33 Figure 4 Conceptual Map of Insurance ................................................................... 34 Figure 5 Research Structure of the Study ................................................................ 41 Figure 6 Structure of Interest Rate Sensitivity Policies .......................................... 81. 立. Tables. 政治大. ‧ 國. 學. Table 1 Development of Social Insurance ................................................................ 16. ‧. Table 2 Comparison of Pension Systems around the World .................................. 28. sit. y. Nat. Table 3 Comparison of National Pension and Labor Pension ............................... 30. io. n. al. er. Table 4 Basic Information of the Respondents ........................................................ 45. Ch. engchi. VI. i n U. v.

(7) Chapter 1 Introduction The study explores how the role and function of commercial insurance can be maximized in Taiwan’s labor insurance, labor pension, and national pension systems. Because the general public is unable to be totally dependent on the country’s current labor insurance and labor pension, the coverage from the national pension system is inadequate in meeting retirement needs. Consequently, related commercial products have been introduced into the market to fill this gap. According to the statistics on life insurance from Life Insurance Association of the Republic of China, the premium. 政治大 NT$ million), increasing by立 12.1% from 581,477 (in NT$ million) last year. From this. payments for life insurance policies from January to March 2014 reached 651,783 (in. ‧ 國. 學. latest information, we can see that the trend leans towards high demand for commercial insurance. The following is a description of the background and. ‧. motivation of the study as well as its purposes and arrangement of chapters.. Nat. sit. y. 1.1 Background and Motive. n. al. er. io. As today’s demographic structure begins aging; many people opt for early. i n U. v. retirement, the average lifespan lengthens, and there are more risks to long life,. Ch. engchi. Taiwan’s citizens have started prioritizing relevant financial planning and insurance concepts as well as retirement planning. Based on statistical data provided by Ministry of the Interior, the dependency ratio between dependents (0 -14 years old and over 65 years old) and working population (15 – 64 years old) is 34.7%. The dependency ratio for the elderly is 15.0% and steadily growing. In addition, from 1993, when society began aging, the percentage people over 65 years of age account for is constantly going up; it reached 11.2% by the end of 2012. Lin Mao Chang (2012) pointed out that, according to the population demographic model, it was in 1974 that Taiwan diagram looked very much like a pyramid. By 2050, old people will 1.

(8) be a social majority; the figure for people over 65 is likely to be 38% of the total population, according to the Council for Economic Planning and Development, which is why elderly-related economic burdens will be much heavier. Moreover, according to the Directorate General of Budget, Accounting, and Statistics of the Executive Yuan, the average retirement age in 2012 is 57.3, later than 2.5 years compared to the data published seven years ago. FINLEA survey information indicates that many people plan to retire by 61, four years later than the current average retirement age, hence the trends of aging, late retirement age, and active retirement. According to the data from. 政治大 years for men and 82.82 years for women. Basically, people have more than 20 years 立. Ministry of the Interior, the average lifespan of both genders in Taiwan is 79.51; 76.43. of retirement life to look forward to; how to prepare for retirement early enough. ‧ 國. 學. becomes a major issue.. ‧. As for Taiwan’s major national policy for retirement planning, aside from the. sit. y. Nat. regular labor pension system, there is also labor insurance and national pension. The. io. er. development of labor insurance, the Bureau of Labor Insurance of the Ministry of Labor pointed out that when Taiwan started implementation of labor insurances in. al. n. v i n C h disability, maternity, 1950, the coverage included injury, death, old age, and five engchi U forms of retirement payments, as well as various payments paid out on term based on actual needs. The labor insurance system went through several amendments including starting hospitalization benefits in July 1956, adding the “unemployment benefits” to the Labor Insurance Act in 1968, and adding the ordinary illness subsidy in the third amendment to the Labor Insurance Act in 1979. As a result, the benefits were then renamed into seven types of maternity, injury, medical treatment, disability, unemployment, old age, and death. In 1988, a fourth amendment was made to add medical care benefits. In July 1, 1998, in answer to the needs of an aging society and 2.

(9) to protect the employment security of senior citizens, the government asked senior citizens who had already collected pension but started working again to enroll themselves voluntarily in occupational hazard insurance. To ensure the employment security of older people, the government started unemployment benefits from labor insurance on January 1, 1999. The recent years have seen amendments to parts of the Labor Insurance Act enacted by the Legislative Yuan in 2008. Furthermore, after the labor insurance pension was implemented in 2009, aside from the “incapacity benefits” which were renamed “disability benefits,” more ways to get monthly. 政治大. pension for disability, old age, and death were added in the form of pension, disability 1. pension, and survivor pension .. 立. Labor insurance is to provide security for all employed workers. If the labor. ‧ 國. 學. insurance premium were maintained at its present rates and the number of people. ‧. receiving pension payments would form an inverted trapezoid signifying a cumulative. sit. y. Nat. rise, the fact that revenues are not enough will be a real challenge. Furthermore, labor. io. er. insurance has had its share of financial crises, including large pensions paid out since the launch of labor insurance in 1950. Large payments were also made in 2006; labor. al. n. v i n C h billion to less U insurance fund shrank from NT$400 than NT$200 billion within the engchi year. The situation only eased up after amendments were made to the regulations. In. recent years, the news that the labor insurance fund is once more at the brink of bankruptcy has incited public unease and panic, causing a serious bank run (Huang, 2010). This signifies that relevant labor insurance system is a volatile factor that causes unrest among the general public. In addition, the formal enactment of the national pension insurance in 2008 is one of the major social insurance policies of Taiwan in recent years. Its main targets. 1. Source: Introduction of labor insurance—Bureau of Labor Insurance, Ministry of Labor http://www.bli.gov.tw/default.aspx 3.

(10) are people from 25 – 65, belonging to a registered household and are not enrolled in labor insurance, agricultural insurance, civil service insurance, and military insurance. The National Pension primarily includes senior citizen pension, disability pension, survivor pension, and two forms of one-time payment: maternity and funeral payments. Because many people do not fully understand the pension system, especially the national pension, the majority of the citizenry takes a resistant attitude and refuses to pay the premium. In addition, there was a complaint from a person whose relative passed away. 政治大 payment, which is the root of the dispute behind after paying over NT$40,000 of 立 before becoming age-qualified (over 65).Therefore, he was not able to get any funeral. national pension premium and being not able to benefit from it. Furthermore, funeral. ‧ 國. 學. payments are restricted to the death of the insured and the survivor annuities is only. ‧. paid to a non-working spouse with at least 55 years of age, or children below 25 years. sit. y. Nat. of age and have no earning capacity. Consequently, family members who do not. io. er. qualify within the abovementioned scope are unable to collect the relevant amount. In addition, Dai Chao-yang, Hsieh Pang-chang, Yang Ya-huei, and Chou Lin-yi. al. n. v i n Canalysis et al (2010) conducted a survey the reasons behind the non-payment of U h e n on i h gc national pension premiums and found that the primary reasons include non-understanding of the national pension system, not knowing if eligible for national pension, and poor family economic situation. The Financial Supervisory Commission (FSC) has expressed that, because the various economic security issues of the elderly arising from an aging society, mainly including deteriorating physical conditions, expected increase in medical expenses, and nursing care expenses due to accidents or illnesses, the general public usually use various forms of pension insurance and long-term care insurance to fill the gap. Among these, pension insurance can fill the gap created by inadequate pension payments (i.e. labor pension, national pension, 4.

(11) etc.). By purchasing pension insurance at a young age and deferring pension payments during the accumulation period, people are able to receive annual pension payments up to the end of their lives, allowing them to have better quality of life during retirement. According to the Minimum Standards for Social Security (Convention no. 102), passed by the International Labor Organization (ILO) in 1952, it states that for medical, sickness, unemployment, old age, maternity, and survivor’s benefits, the State may instate insurance policies to ensure a social safety net where the elderly is. 政治大 subsidized, and mothers cared for. In addition, Chapter 11 of the Convention states 立 cared for, the sick treated, occupational injuries compensated, the unemployed. that the standards for payment of those who enroll in old-age annuity of social. ‧ 國. 學. insurance cannot be less than 40% of the income replacement rate. The balance. ‧. should come from insurance pension and pre-retirement savings so pre-retirement. sit. y. Nat. financial planning is important.. io. er. Moreover, in 2005, the World Bank presented the five-pillar concept, which is mainly a concept for a multi-level pension system. At the same time, in terms of. n. al. targets, aside from workers. v i n Cformally of units in U h e n gdeclared i h c. 1994, the security of. Lifetime Poor and the informal sectors were added. The five pillars are as follows: Zero Pillar refers to national subsidy or social pension, which is mainly to provide the security of minimum living standards for all old people; the First Pillar, which is the “compulsory” social insurance system, with premiums from social insurance being the main financial source, it is financed on a pay-as-you-go basis. Its most important feature is to be able to transfer income for providing minimum living standards for the elderly through the redistribution function of joint social liability; the Second Pillar is the “arbitrariness” of the employee pension system, which may include occupational pension or personal pension plans. Its main feature is the escrow handling operations 5.

(12) of a defined contribution system; the Third Pillar is a personal commercial insurance savings system that is entirely “voluntary. Whether it is occupational pension system or personal pension plans, the system is a voluntary defined benefit or defined contribution system, the goal of which is to guarantee a clear retirement goal; and the Fourth Pillar, which is the moral family support system. This level of security provides care for non-working members of the family in their twilight years. This considers that the financial source of some retirees may be their offspring, home ownership, family transfer, or personal savings. This shows that the international. 政治大 pension insurance has become a major part of every nation’s pension system; it has 立 community does have a set of regulations for elderly retirement security. Personal. also resulted in the rapid development of pension insurance.. ‧ 國. 學. Professor Fu Tsung-hsi from National Taiwan University’s Department of Social. ‧. Works pointed out that in the Three Pillar system presented by the World Bank in. sit. y. Nat. 1994, the defined Second Pillar contribution system of private business is considered. io. er. the core, complemented by the taxes of the First Pillar and the private pension of the Third Pillar. In addition, the Five Pillars presented by the World Bank are as follows:. al. n. v i n 1. non-contributory pension thatCprovides a minimal level h e n g c h i U of protection; 2. First level. is contributory pension which provides related payments; 3. Second level is mandatory individual savings account; 4. Third level is voluntary retirement program; and 5. Fourth level is the informal intra-family or intergenerational resources. In summary, the major development trends within countries around the world in recent years are as follows: 1. Building multi-level pension: common trend among nations 2. Encourage the development of private pension: common trend among nations 3. Cutting back of all relevant pension: common trend among nations 4. Reinforce prevention of risk of poverty: England, Germany, and South Korea 6.

(13) Furthermore, Cheng Wei-hsiang (2008) pointed out that during the 18th century when the Industrial Revolution started in Western countries, labor problems hand in hand with economic transformation. Solutions including labors helping themselves by forming various organizational groups or becoming united to fight with employers, government enacting laws or drafting policies for intervention gradually became the methods for solving various forms of labor problems. It wasn’t until 1919 that the first international labor organization was established; the International Labor Organization. 政治大 labor issues. The preamble of the ILO Charter and Universal Declaration of Human 立. (ILO) is the international organization within the United Nations tasked with handling. Rights exhorts the international community to provide comprehensive protection for. ‧ 國. 學. the elderly and to study long-term considerations. Focusing on protection of the aged. ‧. and social security, Conventions No. 102 and 128 also pointed out that the. sit. y. Nat. foundations of social insurance are built on the insurance premiums of employee and. io. er. employer; countries may or may not intervene. However, the regular basic protection is based on the country’s tax revenues, which should be provided to the citizenry. This. al. n. v i n C h of labor issues. is the major international interpretation As for relevant domestic engchi U. developments, the economic security guarantee system for the elderly presented by the Steering Committee for Pension System Reform of the Executive Yuan (2012) studied multi-level pyramidal structure developed internationally, in which the zero level is social assistance, the first level is public pension, the second level is statutory occupational pension, and the third level is commercial pension, as shown in Figure 1.. 7.

(14) 政治大. Figure 1 Schematic Diagram of Taiwan’s Multi-level Security Insurance System. 立. for the Aging Economy. ‧ 國. 學. Source: Steering Committee for Pension System Reform of the Executive Yuan (2012), compiled by the study. ‧. Nat. sit. y. In addition, Wang Li-rong, Hseuh Cheng-tai, Hsin Pin-long, Wu Chyun Yen. n. al. er. io. (2013) and Lin Shi Chyun (2013) pointed out that since 1993, the International Labor. i n U. v. Organization (ILO) has been working on a variety of issues concerning the elderly. Ch. engchi. and social protection, mainly emphasizing on the alleviation of poverty and provision of low-risk pension. Each nation needs to develop a multi-level support system for the elderly and maintain a flexible structure. Moreover, by utilizing diverse financing sources, the entire system can achieve decentralization of fiscal risk, ensuring long-term stable results. The four levels of the structure for elderly economic security presented by the ILO are as follows: 1.. The major function of the first level is to alleviate poverty; the government is more deeply involved and the major financial source is taxes. The goal is achieving minimum living standards. 8.

(15) 2.. The second level is mandatory occupational pension, which is the support system of mandatory public management; income replacement rate is between 40% and 50%; financial system is pay-as-you-go. The goal is redistribution and using the coinsurance.. 3.. The third level is the mandatory personal account system, which is mainly to supplement the two above-mentioned forms of protection. It is considered a mandatory occupational pension plan, with hopes of ensuring compulsory savings and coinsurance.. 4.. 政治大 personal savings plan using a voluntary pension savings or non-pension plan. 立 The fourth level is a voluntary personal account system, which is primarily a. provide extra economic security for the elderly.. 學. ‧ 國. This encourages an individual to achieve his saving goals; its function is to. ‧. sit. y. Nat. Furthermore, Article 35 of the Labor Pension Code states that business units. io. er. employing more than 200 people should enroll employees who have expressed written willingness to enroll in pension insurance in a pension insurance program that. al. n. v i n is in line with the provisionsC of the Insurance Act, h e n g c h i U with the. union’s consent or. agreement through arbitration for those with no unions. For the foresaid workers who select annuity insurance, the employer shall not follow Paragraph 1 of Article 6 to contribute the labor pension for them. The central competent authority should prescribe the first annuity payments, approval, and other compliance regulations. Business units adopting the provisions of the preceding item should submit this for approval of the central competent authority. The average yield of the first annuity should not be lower than the standards of Article 23. In response to this, the Ministry of Labor once proposed that labors choose investment plans on their own and formed a retirement investment plan ad hoc group. Under the new pension system, workers 9.

(16) may voluntarily pay about 6% of their monthly salaries to their pension account, the amount of which is tax deductible. So far, there are more than 330,000 workers in this voluntary contribution program, with an average contribution rate of 5.3%. At the same time, some workers choose to invest in mutual funds. The Ministry of Labor is considering using self-selected investment schemes to guide workers into saving for retirement earlier. In the self-selected investment program, workers can choose the guaranteed or non-guaranteed products offered by reputable financial institutions, including local and international mutual funds, trust products, and insurance policies.. 政治大 involved in the investment platform, including capital limitations, financial solvency, 立. The government will also draft a criteria for financial institutions qualified to become. risk control mechanism, asset management professionals and experience as well as. ‧ 國. 學. record of major irregularity; only reputable financial institutions will be allowed to. ‧. participate. Currently, the initial plan of the Council of Labor Affairs is to partly open. sit. y. Nat. up the employee voluntary pension contribution system. However, one of the major. io. er. directions for the enactment of laws will be whether companies with more than 200 employees will be allowed to directly go to the platform and carry out retirement. al. n. v i n C h et al (2012) expressed, pension planning. As Fu Tsung-hsi aside from the workers’ engchi U negative response toward voluntary contribution, compared to their Western counterparts, Taiwanese companies still have a long way to go in planning pension system on their own. For example, pension reform in Germany had the government offer tax breaks for corporate pension. If the employer pays the premium for corporate pension, then payments are not counted as taxable income; the company can enjoy unlimited tax breaks. If the employees pay from their salaries, they get a monthly tax break of 220 Euros. Currently, under the new pension system, aside from the personal account system, pension insurance is also mandatory; this has the implications of private pension. The crux behind why it is not executable is in that the guaranteed 10.

(17) income is shoulder by the insurance companies, affecting their willingness to participate. In addition, this system dictates that companies with more than 200 employees may enroll them in pension insurance products in keeping with the Insurance Act, with the consent from the unions. In this type of pension insurance, the employer serves as the policyholder, who deducts at least 6% of the employee’s salary monthly as contribution. The major considerations for government are how to assist SMEs in establishing a similar corporate pension system and how to establish the relevant tax breaks and incentives for companies who set up their own pension plan to. 政治大 In summary, because of the inadequacies of the labor insurance, labor pension, 立. build a strong and healthy corporate pension culture in Taiwan.. and national insurance systems and due to unfamiliarity with relevant systems, the. ‧ 國. 學. general public is usually insecure and distrustful of the country’s policies or social. ‧. welfare systems. A 2012 labor insurance report indicating that the fund may be facing. sit. y. Nat. bankruptcy incited panic and led to a run in both labor insurance and labor pension.. io. er. This resulted in workers withdrawing hundreds of billions of NT dollars in a matter of months (ET Today, 2012; Hsu Dong-hsiung, 2013). Consequently, the study focuses. al. n. v i n C h regarding the current on public awareness and expectations social insurance system in engchi U Taiwan as well as how commercial insurance is able to fill in the gaps, in the hopes of providing reference cases to relevant government agencies and business owners.. 11.

(18) 1.2 Objectives The inadequate coverage of the labor insurance, labor pension, and national pension insurance has prompted the existence of commercial insurance. In this situation, does commercial insurance play a supporting or competitive role? What should it cover? What does the future of commercial or related insurance look like? The study not only tackles these issues, but it also focuses on understanding in-depth of the ideas and opinions of the general public about social and commercial insurance and in-depth of their perception of the difference between the two insurances, in terms. 政治大 To study the difference 立 between domestic labor insurance and commercial. of the security of the aging economy. The objectives of this study are as follows:. 學. insurance.. ‧ 國. 1.. To analyze the inadequacies of the domestic labor insurance system.. 3.. To study how commercial insurance address the inadequacies of the domestic. ‧. 2.. y. sit. n. al. er. To explore future developments or trends for commercial insurance under the. io. 4.. Nat. labor insurance system.. current labor insurance system.. Ch. engchi. 12. i n U. v.

(19) 1.3 Chapter Arrangement The study is divided into five chapters, with the following major points included and discussed in each: 1.. Chapter 1: This chapter covers the research background and motive, its objectives, and the arrangement of chapters.. 2.. Chapter 2: This chapter covers review of related literature. It primarily collates related information on the operations of Taiwan’s labor and commercial insurance to serve as the theoretical basis for this study.. 3.. 政治大 more detailed explanation 立 of the establishment of the research structure, the. Chapter 3: This chapter covers research methodology. It primarily provides a. ‧ 國. 學. selection of the research methodology, designation of scope and limitations, as well as the design of the questionnaire.. ‧. 4.. Chapter 4: This chapter covers research results and analysis. It primarily. sit. y. Nat. focuses on the interviews conducted by the study on selected respondents to. n. al. er. io. understand the ideas and opinions of the general public regarding Taiwan’s. v. current labor insurance, as well as its needs and expectations with regards to commercial insurance. 5.. Ch. engchi. i n U. Chapter 5: This chapter covers the conclusion and recommendations. It primarily discusses how the review of related literature and case analysis results could serve as reference for future studies related to social insurance and industry operations, or subsequent relevant research.. 13.

(20) In addition, the steps and procedures of the research are shown in Figure 2.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Figure 2. Ch. engchi. i n U. v. Research Steps and Procedures. 14.

(21) Chapter 2 Literature Review Technological advances in recent years have brought changing trends such as improvement in the quality of life and an aging society, and people are paying more attention to insurance related financial planning and retirement planning. Frequent news of financial loss such as the recent debt crisis in Europe and the US, financial market upheavals, and massive financial loss in the domestic labor insurance and labor pension have resulted in public feeling of unease and distrust toward national policies, and severe bank run on labor insurance and labor pension funds. Therefore,. 政治大 supplement public needs as they cannot completely rely on labor insurance, or on 立. this study aimed to explore how the commercial insurance industry and products can. labor pension and national pension insurance system for a satisfactory level of. ‧ 國. 學. financial stability after retirement. Hence, in this chapter, the literature review will. ‧. focus on labor insurance, labor pension, the national pension insurance (national. y. sit. io. al. n. 2.1 Labor Insurance and Labor Pension Systems. Ch. engchi. er. this study.. Nat. insurance) and commercial insurance policies to provide a theoretical foundation for. i n U. v. Risk among the elderly is more predictable than for the general public. If accidental death does not occur, then each employee will enter the phase of old age. Due to the frailty of aging, most labors are unable to competently fulfill their original job responsibilities, and therefore unable to rely on employment for their basic living. Therefore, pension from a labor insurance system is a protection against the risk of aging. In particular, it enables retired workers to maintain their original living standard or plan for a basic standard of living. The core value of the system is the mutually beneficial function of premium payments from wages or contracts to ensure financial security of retired workers. 15.

(22) Huang, Chi-Ying (2008) defines labor insurance as mandatory life insurance formulated by the government as an implementation of social policies. To ensure the financial security of labors, the government targets labors and assembles individuals most likely to encounter the same risks, and establishes a common interest group. Using coercive measures and insurance technology, when the insured incurs injury or loss as a result of an accident, the damage is dispersed throughout the entire establishment to compensate the injured and his family. The insured is obligated to pay premiums in order to enjoy the right to compensation, and the purpose is to. 政治大 In Taiwan, in addition to labor insurance, other major social insurances include 立. ensure that workers have a basic income safety net. ". labor insurance, civil service insurance, farmer’s insurance and national health. ‧ 國. 學. insurance, as listed in Table 1.. Time. Insurance. Target. Nat. insurance. sit. 2009. The labor insurance was started in 1950, and related. er. Labor. io. 1950~. y. category. ‧. Table 1 Development of Social Insurance. n. a l Articles were recently amended v on July 17, 2008 after i n C hthird reading, andUenacted the on January 1, 2009. engchi Payments. include. maternity,. injury. and. illness,. disability, old age and death. Claims for disability, old age and death benefits also include an additional monthly pension, namely the Old-Age. Pension,. Disability Pension, and Survivor Pension. (Source: Bureau of Labor Insurance, Ministry of Labor) 1958. Civil service. 1.. Authorized full-time employees.. insurance. 2.. Full-time public school teachers.. 3.. Full-time teachers in authorized private schools 16.

(23) Time. Insurance. Target. category registered as judicial person in accordance with the Private School Act and approved by competent educational authorities. 1985. Farmers’. In addition to members defined by Article 12 of the. health. Farmer’s Association Act, agricultural workers aged. insurance 1995. National health The most widely applicable, with six categories of insurance. 2008. 15 or above are eligible for the insurance.. National. insurance. 學. ‧ 國. pension. 政治大 for citizens aged 25 or more and less than 65, 立Primarily and who have no labor, farmer, civil service or military insured and their dependents.. insurances.. Source: Bureau of Labor Insurance, Ministry of Labor. ‧. (http://www.bli.gov.tw/sub.aspx?a=q58UpWBe19E%3D) , as summarized in this study.. sit. y. Nat. n. al. er. io. The Bureau of Labor Insurance, Ministry of Labor (2011) pointed out that in. i n U. v. 1950, Taiwan’s labor insurance began to be carried out on the basis of the single. Ch. engchi. Article, Taiwan Labor Insurance Program, and other enforcement rules. Through amendments over the years and the third reading at the Legislative Yuan on July 17, 2008, the Executive Yuan finally order the enactment of the Labor Pension Program on January 1, 2009. The original labor insurance included payments such as maternity, injury and illness, disability, old age and death, but after the Labor Pension was implemented, Handicap Benefits was renamed Disability Benefits, and disability, old age and death benefits also include an additional monthly pension, namely the Old Age Pension, Disability Pension, and Survivor Pension. Among these benefits, the old-age benefit is divided into three items: (1) Old-age annuity; (2) Old-age pension 17.

(24) fixed- sum payment, and (3) Old-age pension lump sum payment. An one-time application was only available to those who were insured and qualified for benefits prior to December 31, 2008, and those who are insured after the implementation of the Labor Pension Program in January 1, 2009 are not permitted to choose a lump sum payment. (Source: Bureau of Labor Insurance, Ministry of Labor) In summary, the main purpose of "labor insurance" is to protect workers from losses in the event of all kinds of accidents. Generally, most countries prioritize labor insurance because labors make up the largest population in industrial countries, and. 政治大 such, countries usually rely on labor insurance to resolve many labor related issues. 立. labor issues are relatively complex, resulting in complex and severe influences. As. In her study, Huang, Chi-Ying (2008) noted that because labor insurance is a. ‧ 國. 學. form of social insurance, it differs from general insurance, and are characterized by. ‧. the following features:. sit. y. Nat. 1. Mandatory Principle: All labors above the age of 15 and below the age of 65 must. io. 2. Societal Principle:. al. v i n Social C is a type of government h e n g c h i U assistance. n. organization.. er. be insured by the Labor Insurance through their employee, affiliation or. to ensure the. livelihood security of the social majority through means such as social policy and confining social dangers. Labor insurance is a way for a nation to implement social security policies. Without social security as the highest principle, labor insurance losses its fundamental value. In addition, its associated social responsibility of providing assistance is primarily fulfilled through helping others and re-distributing income to ensure livelihood security. 3. Legal principles: Labor insurance comprises specific policy objectives. To fulfill the constitutional rights of the people, all matters pertaining to the rights and obligations of the people should be clearly defined and legally prescribed, 18.

(25) including the effective dates of the insurance, its interruption, termination, coverage and compensation.. Even for authorized supplementary underwriting,. the authorization should be specific and apparent to the insured. The enforcing agency must comply with the legislative intent and perimeters of the parent law. Details and technical issues are regulated by enforcement rules, and the content must not contravene the parent law or add non-existent limitation to the people’s right to freedom. As shown below, labor pension payment is calculated according to individual. 政治大 method that is most appropriate for them. (Source: Bureau of Labor insurance, 立 circumstances. Those who were insured prior to the end of 2008 can select payment. Ministry of Labor). ‧ 國. 學. 1.. Old-age Pension Annuity: Based on the following two preferences:. ‧. (1) Average monthly insured salary × number of years ×0.775%+ NT$3,000.. sit. y. Nat. (2) Average monthly insured salary × number of years ×1.55%.. io. er. The average monthly insured salary is calculated based on a maximum 60-month average of salary during the insurance period; or for those who have been insured for. al. n. v i n Conhthe actual numberUof months insured; or for those less than 1 year, calculated based engchi insured less than 30 days, calculated based on 1 month.. 2. Old-age pension fixed- sum disbursement (only those who were insured prior to December 31, 2008 are eligible for this disbursement method): Disbursement amount= Average monthly insured salary × number of disbursement months The average monthly insured salary is calculated based on a maximum 60-month average of salary during the insurance period; for those who have been insured for less than 5 years, calculated based on the actual number of months of average salary; 19.

(26) for every insured year, one month of average monthly insured salary is disbursed; for those insured less than 1 year, calculated based on actual number of insured months; for those insured less than 30 days, calculated based on 1 month; or for those insured after age 60, calculated up to a maximum of 5 years. 3. Old-age pension lump sum disbursement： Disbursement amount = Average monthly insured salary × number of disbursement months The average monthly insured salary is calculated based on actual average insured. 政治大 have been insured for less than 3 years, it is calculated based on the actual number of 立 salary for the 3-year insurance period prior to insurance cancellation. For those who. months of average salary during the insured period. For every insured year, one month. ‧ 國. 學. of average monthly insured salary is disbursed; for those insured for more than 15. ‧. years, two months of average insured salary is disbursed per excess year, with a. sit. y. Nat. maximum of 45 months. For those still employed after age 60, the number of insured. io. er. years is calculated to a maximum of 5 years, and combined with the pension from before age 60 into the lump sum payment, totaling a maximum of 50 months. In. al. n. v i n C h1 year are calculated addition, those insured less than based on actual number of engchi U. insured months, and for those insured less than 30 days, calculated based on one month. In addition to the labor insurance, the labor pension is also an old-age pension social system (referred to as labor pension). Basically, the pension system disbursement is different, and can be divided into defined benefit plan and defined contribution plan. However, defined contribution plan from individual accounts has gradually become the main pension trend in global development. The development of Taiwan’s labor pension system over the last few years can be divided into the old pension system and new pension system, as described below. 20.

(27) 1.. Old pension system: The main problems in this pension system are: (1) In Article 57, calculation for the number of years of works is based on the principle of the same industry or company, leading to frequent dispute when combining the actual total number of years worked; (2) Theoretically, employees must remain with the same employer for at least 15 years to be eligible for pension from the employer, thereby seriously affecting job change decisions, and hence a covert threat to worker’s rights; (3) Resignation from a job means the loss of pension years, and new pension years must be recalculated, thereby threatening financial security. 政治大 law is based on Japan’s “lifetime employment” pension system, and therefore 立. during old-age. In Taiwan, job change is a frequent occurrence, but our pension. inconsistent with Taiwan’s reality. Moreover, the lifespan of small and medium. ‧ 國. 學. enterprises are typically shorter, and employees are threatened with job loss as a. ‧. result of business collapse due to employer mismanagement or intentional. sit. y. Nat. collapse to avoid paying for costly employee pension, or severance; and (4). io. er. Employers contribute the required minimum 2% into employee pension reserve fund, resulting in slow growth of the fund. Consequently, the law was amended to. n. al. Ch. formulate the new pension system. 2.. engchi. i n U. v. New labor pension system: After many years of discussions, Taiwan passed the Labor Pension Act in June 2004 after three readings. This Act is a special provision for labor pension, and therefore has priority application in the Labor Standards Acts. Funding for the new labor pension system comes from: monthly employer contribution to the pension (minimum contribution is 6% of labor monthly wage), voluntary employee contribution (within 6% of monthly wage), return from pension fund, late fines and other income. Mandatory employer contributions and voluntary employee contributions are accumulated into the 21.

(28) personal accounts of employees, and are not affected by job change, position loss or business closing. The new pension system operates primarily through the Individual Retirement Account, and supplemented by Annuity Insurance. In the Individual Retirement Account, employers are required to contribute an amount no less than 6% of the employee’s monthly wage toward the pension of workers defined by the Labor Standards Act (including nationals, foreign spouses, and spouses from China, Hong Kong and Macao), and deposit that amount into employee personal accounts. 政治大 full right to this special account, and can withdraw their pension without being 立 established by the Bureau of Labor Insurance. As account holders, employees have. impacted by job change, position loss or business closing. Employees may also. ‧ 國. 學. voluntarily contribute up to 6% of their monthly wage to their pension fund, and this. ‧. contribution is fully deductible from personal income tax. Workers may withdraw. sit. y. Nat. their pension upon reaching age 60. Those who have contributed to the pension fund. io. er. for more than 15 years are to apply for monthly pension disbursement, and those who have contributed for less than 15 years are to apply for lump sum disbursement.. al. n. v i n Cthe In addition, the employer is for the pension insurance contract, the h esignatory ngchi U. employee is the beneficiary, the coverage is limited to the insured, and the insurance company for the annuity insurance must be approved by the central competent authority. Payment method is determined by the terms of insurance policy of the insuring company. Moreover, employer contribution for the annuity insurance must not be less than 6% of the employee monthly wage. However, the new pension system has resulted in subsequent problems. For example, Guo, Ming-Cheng (2006) pointed out that Individual Retirement Accounts lacks a risk-sharing function, and lacks the mechanism for adjusting pay criteria according to consumer or salary index, and thus unable to fulfill the function of social 22.

(29) security. In addition, as a state-owned monopoly, it can invest in or withdraw from any stock market or engage in any form of investments, and may result in the government controlling the overall economy of the country, unless changes are made to the management of pension funds. Furthermore, the new pension system is seriously interfering with the property of labors and employers. Regardless of the lump-sum disbursement of the old system or disbursement by installment of the new system, the greatest controversy in the nation’s labor pension system is that while the amount receivable by the worker is fixed by mandatory. 政治大 for those who opts for disbursement by installment, funds remaining in their personal 立 employer contribution and employee voluntary contribution, the inconsistency is that. accounts are not adjusted according to the impact of economic development or. ‧ 國. 學. inflation. As a result, it is difficult to ensure the livelihood of retirees, and challenges. ‧. the financial security of old age.. sit. y. Nat. Furthermore, frequent turmoil in the global financial environment in recent years. io. er. has a significant impact on labor insurance or labor pension fund. Citing data from the Council of Labor Affairs (CLA), ETtoday (2012) pointed out that deficit in the. al. n. v i n C hoccur in 2017, which labor insurance fund balance will is earlier than expected the engchi U. 2020. This means that beginning in 2018, the labor insurance fund will be siphoning off its capital, and a bankruptcy threat is foreseen for 2027, which is ahead of the expected 2031. Therefore, the majority of the public needs other forms of commercial insurance planning and preparation in addition to labor insurance, labor pension and national pension insurance, especially in terms of financial resources for retirement living or nursing care. In particularly, a rapidly aging population and potential subsequent problems of financial security during old age are the major reasons for involving commercial insurance. 23.

(30) 2.2 National Pension System National Pension Insurance is a kind of social insurance or social security. In accordance with the research of Qi-Ying Huang (2008), the primary social security system could be traced back to 1601 when the Elizabeth Poor Law was representative national assistance and social insurance established by labors was based on mutual aid. National assistance, a rescue system for the poor is the responsibility of a nation or local public group granted by the Constitution. The so-called social insurance mainly unites majority social members who might encounter identical risks and who organize. 政治大 it forms a social solidarity 立 for common danger members and provides group members a self-rescue system of a danger community. Through the power of groups or nations,. ‧ 國. 學. with basic life protection by adopting the payment of “insurance principles” and the equality principle of consideration payment, and income-and-payment balance. ‧. principle.. sit. y. Nat. Pertaining to the legislation background of Taiwan’s National Pension Insurance,. n. al. er. io. as the proportion of senior citizens over 65 years of age reached 7% in September,. v. 1993, implying that Taiwan stepped into an aging society as claimed by World Health. Ch. engchi. i n U. Organization of United Nations (WHO). It is estimated that in 2026, the population of senior citizens will account for 20% of total population, and the aging speed is faster than other European and American countries. In addition, according to statistics conducted by Department of Statistics, Ministry of the Interior, the average residual life of senior citizens over 65 years of age has been increasing, and economic security is people’s primary concern for their senior life. Moreover, as the rapid development of urbanization and modernization in Taiwan, the number of nuclear families has increased, and the traditional functions of family support for the elderly have gradually declined, the proportion of children supporting the elderly has decreased 24.

(31) year by year, and commodity prices on the market continue to soar, providing senior citizens with economic security has become non-negligible in Taiwan’s social security system. However, due to diverse economic security systems for senior citizens in Taiwan, the security content of each system had to be reviewed, and there was still certain unfairness among systems. More importantly, quite a few citizens could not be included in the economic security systems for the elderly, so there was still a serious gap in the systems. Therefore, in light of this, related units have established a pension system to change the lump sum payment of social insurance for senior citizens and to. 政治大 government has integrated various 立. include other citizens who have not enjoyed economic security for the elderly. Meanwhile, Taiwan’s. allowances for senior. citizens to terminate the chaotic situation of allowances so that National Pension Act. ‧ 國. 學. has thus been legislated.. ‧. In addition, the insured have to be above 25 and under 65 years of age, and have. sit. y. Nat. registered household in Taiwan. They have not been granted with payment from civil. io. er. service and teacher insurance, military insurance, and labor insurance. Executive Yuan further illustrated that the year of labor insurance has to be 15 years before a labor can. al. n. v i n C h has referredUto the transition period in other receive pension, so Taiwan’s government engchi. countries to request labors who have received pension before the implementation of National Pension Act and those who receive labor pension 15 years after the implementation of the act to participate in National Pension Insurance. Besides, although current farmers insurance is one of Taiwan’s occupational insurance, it does not provide old age payment, and its related security is not as complete as National Pension Insurance. Therefore, the insured of farmers insurance have become the insured of National Pension Insurance. Moreover, to avoid repeated allocation of resources and repeated subsidies from the government, farmers who have to participate in National Pension Insurance should cancel their farmers insurance. 25.

(32) The main payment of National Pension Insurance includes insurance accidents such as old age, disability and death which are provided with old age pension, disability pension, funeral payment and survivor pension. The amount of payment is based on the total amount of money one has paid for the insurance on the month an insurance accident happens. The first year is based on basic salary, and the standard of payment is adjusted based on Consumer Price Index (CPI). Old age pension can be applied for when the insured are 65 years of age. The amount of payment is calculated with the following two methods, and the better method for the insured will be selected.. 政治大 insurance amount X year of insurance X 0.65% + 3,000; 2. Monthly insurance 立. The insured are able to receive the pension monthly until they pass away. 1. Monthly. amount X year of insurance X 1.3%.. ‧ 國. 學. Besides, to prevent the insured over 38 years of age from obtaining too low. ‧. pension amount even though they pay for the insurance each month, the. sit. y. Nat. aforementioned first method can serve as a supplement. In addition, to connect the. io. er. program of old age allowances, National Pension Act provides those who are 65 years of age or older and who do not enjoy other social payment with NTD3,000 guaranteed. al. n. v i n C hPension for SeniorUFarmers can receive National pension, so farmers with Welfare engchi Pension instead when they are 65 years old.. In discussing the comparison of National Pension System, Ming-Rui Xie (2004) indicated that many countries implemented National Pension System in the world, and that it could be regarded as one part of the social welfare system. Among social security and social welfare systems promoted by European and American countries, social insurance is an important policy for promoting the social welfare system. The implementation method of the system can be divided into Bismarck Model and Beveridge Model. The former values the spirit of social insurance, and it is compulsory. In addition, labors are the main insured, and the social welfare system of 26.

(33) Germany adopts Bismarck Model. The latter emphasizes universal welfare, and its social insurance stresses uniform rate and payment. Among which, uniform rate implies that labors and self-employed workers pay the same amount of insurance fees, and uniform payment refers to that each insured person enjoys identical payment. However, dependent population such as children and women can enjoy supplementary payment from their government. The system in England adopts Beveridge Model. In addition to Bismarck Model and Beveridge Model, there is another model called Swedish Model which emphasizes universal social security system. The model. 政治大 service departments. As the social security system has been the core of Sweden, and 立. is composed of a social security system, active labor market policy, and large public. before 1990, the promotion of the model was extremely successful in the country, it is. ‧ 國. 學. called Swedish Model. However, until the end of the 1990s, due to the World War and. ‧. economic crisis, Swedish Government revised it and proposed a new pension policy. sit. y. Nat. which is called statutory pension payment. The payment method of the system can be. io. er. divided into three levels: the first level is basic pension, the second one is a legal and compulsory system related to salary, and the third one is additional pension from. al. n. v i n C hwith labor and employer enterprises provided in accordance agreements. The content engchi U of different pension systems is as shown on Table 2.. 27.

(34) Table 2 Comparison of Pension Systems around the World. Second level Third level. Other illustrations. England Beveridge Model 1908. Compulsory Mainly for labors Old age pension includes 1. Employee 2. Self-employed worker 3. Those who take care of children under three years of age 4. Those who receive social payment (the unemployed insured); labors who voluntarily involve in nursing. This was a compulsory social insurance system established by Germany in the 1880s for labors. Meanwhile, it was a public social welfare system that determined the amount of payment, but it was not governed by the country. The feature of the system is that labors could avoid the risks of birth, old age, sickness, death and disability. With regard to their income loss, it was based on a labor’s original income, but not his demand for lifetime insurance which was determined by the level and value provided by labor service. Labor unions and capital representatives could manage the funds in accordance with laws.. First level is universal Second level is optional Public pension (Basic National Pension). Universal Compulsory Basic pension. Public pension; enterprise pension Individual pension (Private commercial insurance). Legal, compulsory and related to salary Additional pension from enterprises provided by labor and employer agreements. Beveridge Model was a universal model, and its social insurance stressed uniform rate which implies that all labors (shared by employers and governments) and self-employed workers paid for the same amount of insurance fee. In addition, the model emphasized uniform payment (dependent population such as children and women was provided with supplementary payment). However, the result of the model showed weak redistribution, and it provided universal payment that could only maintain basic livelihood. In addition, it had to be supplemented by social assistance, private payment or personal savings.. Since 1976, Sweden had begun to implement its partial pension system which stipulated that pension receivers should be between 60 and 65 years of age, their working hours should be five hours less each week to work at least 17 hours per week. In addition, receivers should work at least ten years since they were 45 years old. In 1994, the earliest pension receiving age has been changed to 61 years of age, and receivers enjoy 10 hours of compensation hours at most.. ‧. io. n. er. Nat. al. 學. ‧ 國. 立. 政治大. y. First level. Germany Bismarck Model 1889. sit. Nation Pension model Implementatio n period Features. Ch. engchi. i n U. Sweden Swedish Model 1913. v. Sources: Yun-Wen Gu (1996), Hui-Fen Lin (2003), Ming-Rui Xie (2004) et al.. Generally speaking, the national pension systems implemented in other countries after the 1990s have been changed on the basis of economic conditions, and related rates or insurance fees have been gradually adjusted. The chief reform and development trend of national pension systems in the world is as follows: 28.

(35) 1. To elevate the payment receiving age or the payment years for receiving the entire amount of pension payment. 2. To change payment calculation formulas and reduce the amount of pension payment. 3. To elevate the minimum qualification period for receiving pension. 4. To adjust the amount of pension payment in accordance with commodity prices instead of the increase of salary. 5. To increase the residential years of the insured.. 政治大. 6. To stipulate payment amount with income or property investigation.. 立. The comparison of related insurance rates, burden proportion, payment items,. ‧ 國. 學. related pension of the aforementioned Labor Insurance Pension and National Pension. ‧. is as shown on Table 3.. n. er. io. sit. y. Nat. al. Ch. engchi. 29. i n U. v.

(36) Table 3 Comparison of National Pension and Labor Pension Item Insurance rate. National Pension 6.5％ to 12％. When the. Labor Insurance Pension 7.5％ to 13％. The insurance rate is 7.5% for the. insurance starts, it is 6.5%, and 0.5% of insurance rate is added every two years until it reaches 12%.. first two years, and 0.5% of insurance rate is added every year from the third year until it reaches 10%. Then 0.5% of insurance rate is added every two years until it reaches 13%.. Burden proportion for. The insured: 60％ Government: 40％. 1. Employed labor: Employer: 70％ , labor: 20％ ; government: 10％ 2. Occupational worker: Labor: 60％ ; government: 40％. insurance fees Disability pension Old age pension Survivor pension Funeral allowance. 立. 1. Ordinary accident: Birth, injury and sickness, disability (pension and lump sum pension), old age (pension and lump sum pension) and death (pension and lump sum pension). 2. Occupational injury: Injury and sickness, disability (pension and lump sum pension), death (pension and lump sum pension) and. 政治大. ‧. ‧ 國. 學. 1. Disability pension: Those who do not have working ability for lifetime after being assessed. 2. Old age pension: 60 years of age with at least 15 years of labor insurance. 3. Survivor pension: (1)Death during insurance period. (2)Death during the period of receiving disability. period. (2)Death during the period of receiving disability and old age pension.. and old age pension. (3)Those who have at least 15 years of labor insurance and who are qualified for old age payment, but pass away before receiving the payment.. None. 1. Those who had labor insurance prior to the implementation of National Pension, when the insured or their relatives can apply for disability payment, old age payment or. n. Options. Ch. sit. io. al. y. 1. Disability pension: Seriously disabled without working ability after being assessed. 2. Old age pension: 65 years of age or over. 3. Survivor pension: (1)Death during insurance. Nat. Payment conditions. medical payment for occupational injury.. er. Payment items. engchi. i n U. v. survivor payment, they have to choose 30.

(37) Item. National Pension. Labor Insurance Pension between lump sum payment or pension payment. 2. Thos who had labor insurance prior to the implementation of National Pension, and those who pass away during the period of receiving disability or old age pension, their relatives can choose the difference of the lump sum disability or old age pension in which received pension has been deducted.. None. Those who are 65 years of age can start receiving the pension.. Deferred pension. 立. None. 政治大 Decreasing pension: If those who are qualified for. 學. receiving labor insurance pension apply for receiving it one year earlier, 4% of pension will be reduced. 20% of pension can be deducted at most.. ‧. ‧ 國. Decreasing pension. Deferred pension: Those who are qualified for receiving labor insurance pension can receive an additional 4% of pension for each year being deferred. 20% additional pension at most.. Source: Direct Selling Labor Union of Occupation—Taichung City. y. Nat. n. er. io. al. sit. (http://www.tccg-direct.glob.tw/topics.aspx?id=169). Ch. i n U. v. To sum up, Taiwan had social insurance such as labor insurance, military. engchi. insurance, civil service and teacher insurance, and farmers insurance for workers, but approximately over three million citizens above 25 and under 65 years of age could not participate in any social insurance. Therefore, National Pension Insurance System, a social insurance system, has been designed to bring social security and insurance to each one of Taiwan’s citizens. Besides, payment age for labor insurance pension has been gradually adjusted to 65 years, so if a labor retires at the age of 60, he still has to wait anxiously for another five years without any income. Although “decreasing pension” is available for labors to choose from so that they do not live without any income, some labors do not choose the option. Therefore, to general labors, it is one 31.

(38) of their concerns regarding economic security during old age as they are not sure if they can still work and if they are healthy after they are 60 years old. Related issues regarding National Pension Insurance lie in the insured who are chiefly housewives, farmers, and citizens who do not work. Therefore, National Pension Insurance has turned into disadvantaged insurance, which is difficult for us to expect its income redistribution function due to the financial abilities of the insured. Moreover, as it is difficult to collect insurance fees, its benefits will be restricted, and it further influences the willingness and confidence of the insured to participate in the. 政治大 Taiwan’s government wants to maintain the normal operation of the system, a great 立. insurance. Therefore, it might not be feasible for the insurance to be compulsory. If. investment from Taiwan’s national treasury is required to maintain its financial. ‧ 國. 學. operation. However, national public power might get involved to lead to one-way. ‧. payment in Taiwan’s social insurance system, which might weaken reciprocity and. y. sit. io. er. disappear.. Nat. social solidarity, and which might make the spirit of mutual aid among members. Therefore, people in general tend to turn to other commercial insurance to plan. al. n. v i n and save “money” for old age,C and they even attempt h e n g c h i U to save additional retirement. pension to supplement the insufficiency of expenses for old age. Commercial insurance will be discussed in the following section.. 32.

(39) 2.3 Commercial Insurance In terms of types of insurance, they can basically be divided into social insurance and commercial insurance, with the categorization shown in Figure 3.. Universal health insurance, Labor insurance, Social Insurance. farmers’ insurance, civil servant’s insurance, military, national pension insurance. Insurance. Commercial Insurance. 立. Personal. Life insurance, health insurance, and accident. Insurance. insurance. 政治大 Asset. Fire Insurance, car insurance, etc.. Insurance. ‧ 國. 學. Figure 3 Types of Insurance – Social Insurance and Commercial Insurance. ‧. Source: Related literature collated by the study. sit. y. Nat. io. er. There are differences in commercial insurance and social insurances in terms of content. If commercial insurance and social assistance are at both extremes, then. al. n. v i n social insurance can be considered between them (Bodenheimer & C hthe spectrum in U engchi. Grumbach, 1992), as shown in Fig. 4. Commercial insurance emphasizes the relevance between the amount of the premium and the size of the payment coverage, and the level of the risk dictates the amount of the premium, while the guiding spirit of social assistance is not being able to stand seeing someone suffer. Hence the strength of the community is used to aid and assist the weak through taxation. There is really no relationship between payment and paying out, so to speak. Social insurance lies somewhere in the middle; its principle is that users of this service pay their own way. However, it abandons the risk calculation portion of premium payments. In addition, voluntary mutual aid society is used to reflect the concept of “helping 33.

(40) oneself, extra help will be from others. Aside from being mandatory, the term “social” also forms an important facet of social insurance. Users of this service pay their way while being required to do so at the same time, which is a major feature of social insurance. Consequently, it is the middle ground situated between commercial insurance and social assistance.. 立. 政治大. ‧ 國. 學 ‧. Figure 4 Conceptual Map of Insurance. sit. y. Nat. Source: Yang Ching-li (2000). io. al. and asset insurance, with the descriptions as follows:. v i n C hunderwrites personal Personal insurance: primarily e n g c h i U risks such as death, disability n. 1.. er. Commercial insurance is divided into two major categories: personal insurance. and disease, as well as old-age benefits. 2.. Asset insurances: primarily underwrites non-personal risks such as buildings, cars, and other assets. In terms of the status of the commercial insurance market, CTW Securities (2010). once pointed out that the Asia-Pacific market is the largest insurance market in the world, with last year’s premium totaling US$358 billion, accounting for 15.4% of the total global premium payments. It surmised that the reasons are due to the strong and rapid economic growth in the region, higher rate of savings, and urbanization. This is 34.

(41) also why insurance companies see better performance in the sales figures for accident and medical, retirement and old-age pension products. Taiwan is the region’s fourth largest and the world tenth largest market for commercial insurance; in 2009, premium payments totaled US$52.2 billion. From 2004 to 2009, life insurance premiums grew by 9.4% compounded annually. Moreover, market penetration rate is 13.8%, with average individual premium amounting to US$2,250. This shows that Taiwan is an extremely developed market for commercial insurance products; at the same time, it also indicates that Taiwan’s citizens have a lot of demands in that area.. 政治大 after retirement and the person’s income before retirement, which is called income 立 Lin Wan-yi (2013) pointed out that usually the ratio between payment received. replacement rate may serve as indicator to measure the adequacy of post retirement. ‧ 國. 學. economic sources. Often, pension insurance will have a corresponding income related. ‧. payment, primarily because annuity insurance is a form of quality of life guarantee in. sit. y. Nat. retirement or old age. If one is highly paid during his or her time in the workplace,. io. er. and pays high insurance premiums, the person will receive more money after retirement or at old age. In addition, annuity insurance payment can be seen as a form. al. n. v i n of periodic salary concept. TheC employee puts aside U h e n g c h i a part of his salary as premium. and gets in back in increments after retirement. Of course, this includes risk distribution and investment benefits. Liao Tsen-wei (2006) pointed out that income replacement rate is the ratio of money received after retirement accounts to money received before retirement in the form of salary. This indicator is used to measure whether the individual will be able to maintain pre-retirement living standards after leaving the workplace. Often income replacement rate will differ according to professions; changes can also be due to difference in pre-retirement salary standards. The Examination Yuan pointed out that higher income replacement rate indicates that living standards during retirement are higher. Usually because retirees do not have the 35.

(42) need to save up for things or support their offspring, they are able to maintain the quality of life they had before retirement. The income replacement rate of regular households in Europe and the US is between 60% and 70%. If, for example, pre-retirement monthly salary was NT$100,000, monthly pension can amount to about NT$70,000, enabling the person to maintain living standards he had while working. Currently, combining labor insurance old age benefits and labor pension, the income replacement rate of Taiwan’s citizens is 45%. Cheng Wei-min et al (2011) pointed out that several factors affect retirement. 政治大 value.” The former describes the risks faced by retirees in accumulating retirement 立. finances, including “personal and system risks” and “risk affecting retirement asset. funds as well as after retirement. The latter looks at the risks affecting the pension.. ‧ 國. 學. Risks affecting retirement asset value mainly includes health and long life, inflation,. ‧. investment, gender, marital status and number of offspring, pre-retirement income,. sit. y. Nat. and other unpredictable risks. Among these, inflation is what primarily affects the. io. er. actual purchasing power of the currency. For retirees, some of their expenditures are higher than those for non-retirees, such as medical care expenditures. In addition,. al. n. v i n investment risks may be dividedCinto systemic and non-systemic. The former includes hengchi U factors affected by political, economic, and social environments, which cannot be eliminated by spreading the investment. The latter refers to the risks involving the corporate investment target, such as operations and management, financial problems, etc.; spreading out the investment may help reduce these risks. Consequently, systemic risks in retirement are more severely impacted by the overall economy. Moreover, for those with high monthly salary, the degree of financial adequacy is higher. Post-retirement income can be derived from (1) statutory pension, (2) savings, and (3) other income (such as those from interest, rental fees, or given by offspring). Other unpredictable risks include divorce, death of spouse, or medical expenses, 36.