The light turned from yellow to red for the first time! Public education pension fund sustainability index fell to 47%

The government implements the annual reform of suspending cuts, so that the amount of funds invested in the annual reform should be significantly reduced. Not only that, the Budget Center of the Legislative Yuan reported that the current public education pension fund will continue to be used up every year, which is earlier than the first actuarial report after the annual reform. According to the 9th actuarial results, the pension fund will turn from a "yellow light" to a "red light" in 2017, and the sustainability index is only 47%. There is no red light compared with the last actuarial test, indicating a downward trend in the financial sustainability of the fund.

The budget center report pointed out that since July 1, 2012, the individual account system for public education has been implemented. New recruits will no longer join the original pension fund, and the fund will be converted into a closed system. The government will prepare budget allocations year by year in accordance with the law. According to the 9th actuarial results in 2014, the public education pension fund allocation rate remains at 15%, and the years of exhaustion before government subsidies are 134 and 131 respectively. The government adopts a 20-year allocation plan with the goal of delaying the exhaustion to 138 and 134 respectively. The annual subsidies are 12.3 billion yuan and 8.3 billion yuan respectively, totaling 20.6 billion yuan.

However, according to the current subsidy plan, the estimated exhaustion year of the Public Education Pension Fund is still 2 years and 3 years ahead of the 8th actuarial year of 111, 140 and 137 respectively, indicating that the fund's financial sustainability goal has deteriorated. The period for making up for the financial gap arising from the individual special account system has been extended from the original 10 years planned by the competent authority to 20 years. Under the priority of statutory appropriation, the subsequent appropriation of the current pension fund and the financial improvement process will be postponed accordingly.

After the current financial gap is filled by the government in accordance with the law, in the absence of other policy adjustments or additional government subsidies, the annual estimates of the public education pension fund will be exhausted in 138 and 134 years respectively, both of which are shorter than the financial security target set in the annual reform to ensure that the fund will not be exhausted in 30 years.

According to the sustainability index and sustainability indicator lights of the 9th Actuarial Report, the Catholic Sustainability Index lights showed red lights in the base year 120 and 117 respectively, and the sustainability index was only 47%, less than 50%. Compared with the 8th Actuarial Report, there were no red lights, indicating that the financial sustainability of the fund has been declining. As for the military personnel pension fund, the sustainability index will be 100% in 2012, maintaining the green light.

The Budget Center stated that retirement funds have the characteristics of long-term investment and compound interest accumulation. Early and full disbursement can increase the fund's usable asset size, reduce the growth pressure of hidden liabilities through the accumulation effect of investment income, and delay the imbalance of fund income and expenditure and the time to run out.