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Taiwan’s National Pension Program: A remedy for rapid population aging?

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  • Hsieh, Kevin Yu-Ching
  • Tung, An-Chi

Abstract

The population of Taiwan is aging rapidly. One undesirable outcome is public financial deficits, which, in turn, brings about another undesirable result, i.e., intergenerational inequity. We study how these outcomes can be mitigated by focusing on the National Pension Program (hereafter referred to as the NPP), because it is a key government response to population aging, as well as a clear illustration of how fiscally unsustainable social programs can undermine the equity across generations. Four questions are asked: (1) How serious is intergenerational inequity in Taiwan? (2) Does the NPP reduce or exacerbate the imbalance in financial burdens across generations? (3) How can the financial sustainability of the NPP be restored? and (4) How can intergenerational equity be restored? To address these questions, we apply the Generational Accounting method to 2010 NTA data and official population projections. The results suggest that the NPP may enhance the welfare of the current elderly, but the financial burden on the generations not yet born is bound to increase unduly. As such, the NPP alone is not a panacea for rapid population aging, and all citizens and the State should work together to find better and more comprehensive solutions.

Suggested Citation

  • Hsieh, Kevin Yu-Ching & Tung, An-Chi, 2016. "Taiwan’s National Pension Program: A remedy for rapid population aging?," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 52-66.
    • Handle: RePEc:eee:joecag:v:8:y:2016:i:c:p:52-66
    DOI: 10.1016/j.jeoa.2016.05.001
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    Cited by:

    1. Shih-Chang Chen & Chaou-Wen Lin & Po-Fu Lee & Hui-Ling Chen & Chien-Chang Ho, 2021. "Anthropometric Characteristics in Taiwanese Adults: Age and Gender Differences," IJERPH, MDPI, vol. 18(14), pages 1-13, July.
    2. Lyons, Angela C. & Grable, John E. & Joo, So-Hyun, 2018. "A cross-country analysis of population aging and financial security," The Journal of the Economics of Ageing, Elsevier, vol. 12(C), pages 96-117.
    3. Adeabah, David & Asongu, Simplice & Andoh, Charles, 2021. "Remittances, ICT and pension income coverage: The international evidence," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    4. Chen, Chien-Hsun, 2023. "Taiwan’s Rapidly Aging Population: A Crisis in the Making?," MPRA Paper 116543, University Library of Munich, Germany.
    5. Anning Hu & Feinian Chen, 2019. "Allocation of Eldercare Responsibilities Between Children and the Government in China: Does the Sense of Injustice Matter?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 38(1), pages 1-25, February.

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    More about this item

    Keywords

    National Pension Program; Population aging; Public finance sustainability; Intergenerational inequity; Generational Accounting; Taiwan;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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