Evaluation Indicators for Defined Benefit Pension Plans and an Application to Plans in Taiwan
Author
Abstract
This study presents a pension evaluation indicator model that provides a pension plan’s critical information in terms of solvency, economic security, fairness, and economics. The proposed indicator model is helpful for making cross-plan comparisons, for policymaking, and for government communication. An empirical study using the model finds the following: (1) The solvency indicator of the Labor Insurance is the lowest, indicating the scheme’s financial emergency. (2) Merging the National Pension Insurance into the Labor Insurance and covering unoccupied nationals with a minimum monthly wage could improve the economic security of pensioners insured under the National Pension Insurance. (3) The intergenerational fairness indicator F-G indicates the importance of financial soundness; the Civil Servant and Teacher Insurance is nearly fully funded and has the smallest generational differences. (4) The Civil Servant and Teacher Insurance has the lowest interoccupational fairness indicator F-O. (5) The Labor Insurance has the highest interindividual fairness indicator F-I. Raising the proportion of the premium paid by the insured person can improve the financial status of the Labor Insurance and balance interindividual fairness across plans. (6) The economic indicator reveals the significant and far-reaching social impact of an insolvency event or reform of the Labor Insurance.
Key Words
pension, pension reform, intergenerational fairness, pension index
