Projected Pension Cuts Outrage Taiwan’s Military

Taiwan’s military is up in arms over pension reforms involving retired civil servants, public-school teachers and military officers that took effect on July 1, gradually adjusting downwards the preferential interest rate, an astonishing 18 percent annually for the savings accounts of the target groups and reducing the income replacement ratios. A compounded 18 percent interest means principal would double every four years and two months.

While the majority of the public are supportive of the reforms, given that demographic aging has been putting increasing upward pressure on government spending, retired military members complain that they rely more on pensions than other professions because they retire at a much younger age from inherently dangerous jobs.

The nosedive in military morale could hardly come at a worse time, with China’s People’s Liberation Army warships and airplanes conducting combat drills near the island almost weekly as a reflection of Chinese President’s Xi Jinping’s growing assertiveness against Taiwan’s Democratic Progressive Party (DPP) government, led by Taiwanese President Tsai Ing-wen, who has continued to reject calls to agree that there is only one China.

It also comes at a time when China has been actively courting retired Taiwanese military brass with all-expenses- paid trips to symposiums and functions on the mainland.

As the pension reform made its way through the legislative approval process, it has been accompanied by fierce protests by retired military members, including several incidents where they tried to storm Taiwan’s parliament, the Legislative Yuan. One former colonel died after attempting to climb a wall and falling.

“How can the government unilaterally cut our pensions without our consent? The government is lousy, unfair and unjust!” said Wu Chih-chang, chairman of the Blue Sky Action Alliance, which organized some of the protests.

The DPP government, which made addressing inter-generational inequality one of its main policy goals, argues that had the changes not been made, the pension program for military personnel would go bankrupt as early as in 2020 and for teachers and civil servants in 2030 in 2031 respectively.

The opposition Kuomintang (KMT) supports the target groups, which traditionally form the party’s voter base, and calls for constitutional interpretations for pension cuts to be scrapped.

According to John F. Copper, a US political scientist with a Taiwan focus, the DPP has long perceived that the KMT bought votes with generous government pensions and the pensions should be cut.

The misgivings are deeply engrained. The military is burdened by its past as a pillar of the former authoritarian KMT regime: For 40 years, before the democratic transition, the military carried out surveillance of activists and court-martialed dissidents, many of whom now hold political office for the DPP.

“The DPP has long been hostile toward the military in Taiwan, as it perceived the military as Chiang Kai-shek’s military, comprised of mainland Chinese and thus close to the KMT that ruled Taiwan after World War II and until Chen Shui-bian of the DPP was elected in 2000,” Copper said.

“Chen and his party thus did not want to generously fund the military and after 2016, with the DPP back in power, the situation is the same,” he added.

Copper added that the result was the US felt Chen and the DPP were freeloaders, and that although the DPP when in opposition had promised to increase the defense budget, it has not done so to the satisfaction of the US, holding the budget at 3 percent of GDP.

Enoch Y. Wu, a former non-commissioned officer in the Taiwanese Army special forces, in a New York Times opinion piece in May 2017, confirmed this notion, saying Taiwanese leaders have gutted the military and continued to base defense planning on the assumption that the US would always come to the rescue.

Taiwan’s defense policies, he said, are largely a result of deep distrust between the military and politicians.

“This mutual suspicion has prevented policy makers from embracing military affairs,” Wu said.

“The Democratic Progressive Party’s landslide victory in the 2016 elections was recognized as a rebuke of the Kuomintang’s pro-China policies, yet only one lawmaker in the 113-member Legislature initially signed up to serve on the defense committee,” he added.

Steve Tsang, director of the SOAS University of London’s China Institute, pointed out that in the short term the pension cut will most probably will negatively affect morale in the military, adding that the critical issue is for Taiwan’s government to reform its pension system without weakening its readiness in defense.

“The two are not inherently completely incompatible though doing so will require the government to be imaginative about defense planning and spending more generally,” Tsang said.“Taiwan certainly needs to enhance its readiness, but this should not mean that pension reform must not be introduced.”

Jens Kastner is a Taiwan-based correspondent and longtime contributor to Asia Sentinel