Sep 4, 2016

Cory Diary : Taiwan Housing and Pension System

In an ironical twist, Taiwan DPP (Green Party) recent elected president policies direction is moving towards what Singapore has been doing despite the blue camp is more "Pro" Singapore. Of the 5 Major reforms, two of them is deep in Singaporean heart.

Constructing 200,000 units of social housing for lease to low-income citizens

Taiwan problem isn't just about wealth gap. The main issue is the low average salary. Wealth gap is only meaningful when the average ( or median) pay is high. Even if they have succeeded in distributing the wealth evenly, it only means everyone is poor. The average salary in Taiwan is about S$2,100.

In the survey, 1111 Job Bank, one of Taiwan's leading human resources agencies, said that employers offered NT$26,493 (US$855) in starting salary on average to new college graduates. That's about S$1,100.

Cost of living in Taipei for equivalent level of standards, is not far from Singapore. Housing in Taipei is not cheap either and not far from our Condo prices (depending on location) considering they do not have wide social housing development policies previously. A pain to many because limited subsidised housing currently is build for a small pool of Civil Service personnel who can sell it as a cash rich scheme on the expense of the public. Why do they have such policy is beyond logic as not everyone in the service can get it either. 

Initiating nationwide discussions on establishing a permanent pension fund

Taiwan pension system appears to depend on future generation to pay for current retirees.

In an era of lower birth rate and low income, the Civil Service Pension will go bankrupt within 2 to 3 years.  The Civil Service Pension is quite generous. People in the government will prefer to retire whenever possible rather than work. And many did retire young and subsequently out of economic contribution to the country at a time when they are at their peak of experience. This is beyond .. beyond... logical sense. A self inflict wound !

And the financial burden go to the young who not only has a lower salary environment than their parents but also higher living cost. Another blow to themselves.

Many of such policies are short term to appease to get votes since the Civil Service constitutes as large voter base. Compared to Singapore, CPF money is how much we saved and government service it at a reasonable interest rates. We pay our way to retirement and not our children.


President Tsai clearly got her financial logic right. The next is will she be able to execute what she says ? Taiwan will do well if she does, and if so, stay long after to clean up the political mess of President Lee(Blue and Pro Jap), President Chen (Green but corrupt), President Ma (Blue and powerless). And Vice President Lien ( Blue and Pro China). By the way, "Pro" is an understand statement for both. I would say Extreme.

Base on the past few month records, President Tsai did right by removing key positions from both blue and green camps of top level corrupt politicians from key government and legislation posts. I bet she will succeed.  I see lights at the end of the tunnel for Taiwan now.


Taiwan Notes:

There are currently 135,224 retired civil servants, the United Evening News reported. Each civil servant receives an average of NT$56,383 in monthly pension payments and preferential interest deposits.

According to MOCS statistics, spending on civil servants' pensions has accounted for about 8 percent of the government's annual budget over the past few years. The proportion is likely to rise if no reform is adopted, creating further burdens on government finances and squeezing spending on other segments.

According to the MOCS' report, only 2,719 civil servants retired in 1996, compared to a staggering 11,803 in 2015, while the average retirement age was 61.14 in 1996 compared to 55.72 in 2015

One of the major goals of Tsai's pension reform is to achieve equality, which addresses social tensions arising from the huge differences between government and private sector pensions.

But how deep should the cut be? This is indeed the most difficult part of the reform, which will affect vested interests of all active civil servants, (currently almost 350,000,) and all retirees, (currently more than 135,000).


  1. Taiwan is one of my favourite countries to visit. Lovely food and generally friendly folks. I had the opportunity to chat with the locals during a few visits and it sounded like the system generally had issues, especially the low starting wages grads - they tend to term it as 22K, so much so that many young grads are not taking up corporate jobs and instead try their luck setting up food stalls or go overseas to countries like Singapore to work.

    1. The main issue is their TAX Structure where the middle class bear the brunt of taxation. For same amount of salary in Singapore, they pay at least double what Singaporean do. In-addition companies only need to fork out 6% to employee pension fund compared to Singapore 17% CPF.

  2. When my Taiwanese Army friend retired some 26 years ago, he was given a piece of land to farm. A young man of only 40years old then, he built a 3sty high detach house of 4 bedrooms on his land and began a life of a farmer. That's when the country had abundance of land.
    Then his salary as a grad, was very low. Then again, we can't compare, Taiwan has many Unis, they just build them unlike Singapore, being worried about not enough jobs for grads, control the number of uni too tightly till our people are handicap when we open up to foreigners.

    1. I understand more than 95% Taiwanese students enter college. A right mix needs to be achieved. We are a little too tight. Taiwan is way too loose imo that devalue degree. There were also serious job mis-match. People do not respect local graduate unless you comes from top university. Graduate quality is quite poor.

      Dual Citizen Taiwanese who live and study Oversea when returned, have relatively stronger attributes. Many able to secure good jobs in MNC with good pay way above national average.