The Reform Study and Recommendation of Public Labor Pension in Taiwan: Considering the Effect of Reemployed Retired Laborers

Reform and sustainability of the defined benefit pension system has received considerable attention because it addresses the challenges of an aging population and the risk of fund insolvency. However, previous studies have little consideration to the effects of reemployed retired laborers and the sensitivity of each key reform element. The study established a financial forecasting model incorporating reemployed retired laborers and employed comparative static analysis to examine the effects of several variables on Taiwan’s public labor pension. In Scenario Three, the fund balance was projected to remain positive until 2064. Furthermore, increasing the premium rate to 17% had the strongest positive effect on the fund balance with 16-year delay, while an annual government subsidy of NT$100 billion had the second-most positive effect with 10-year delay. Moreover, solely reducing the old-age annuity amount by 10% had a positive impact on the fund balance with 7-year delay. Furthermore, allowing 50% of reemployed retired laborers to reenroll in the system had the positive effect with 9-year delay before bankruptcy. Finally, the study proposes a comprehensive reform plan for the public labor pension and offers valuable insights for other countries.