A week in Taiwan gave Retirement Income Journal’s Kerry Pechter some insight into the Taiwanese retirement system along with some sightseeing time. In “The View from Taroko Gorge,” Pechter shares what he learned about their system as a whole and from an individual tour guide’s perspective. His tour guide was a 51-year old woman who had a successful trading business and much wealth until a financially irresponsible husband and changing times took it all away, including her pension. She moved back with her parents, evaluated her strengths and became a successful tour guide, and is now back on the road to financial stability.
By viewing Taiwan’s retirement financing, Pechter brought insight to our predicament in America. They lost a lot in the 2008 economic decline as well. He met with university professors, managers from the local Prudential and Fitch Ratings, and government officials. Government and university employees are lucky to have a generous pension and some other workers in the public and private sector receive pensions through their jobs as well. Taiwan also has a government pension similar to Social Security, but that only pays around 15% of your income into retirement and is running out of money. A National Annuity Pension Plan to cover people who are self-employed or are not covered by other plans was established in 2008 and has an annuity payout option.
Prudential and 38 other firms saw the opportunity in this wealthy and open market to set up shop and manage some of the state funds and other Taiwanese retirement funds. The management of funds is a very political business in Taiwan, subject to manipulation and infrequent or incomplete reporting. The firms working in Taiwan hope to infiltrate the marketplace even further and find a way to make retirement planning less political and more about the people.