ABSTRACT
In the early 1950s and 1960s, Taiwan established its own defined benefit (DB) pension plans for employees in the public and private sectors. At that time, Taiwan experienced high birth rates; as such, DB plans together with a pay-as-you-go system were truly an ideal policy for enjoying a low contribution rate and a high public support. Nevertheless, since the 1990s, Taiwan has experienced a population ageing problem, and financial support for all public pension plans are deteriorating rapidly. Such circumstance inevitably results in a bitter conflict between different generations in Taiwan. To solve such intergenerational problem, this chapter suggests that the pension reform drive take a closer look at the possibility of switching the current DB pension plans to defined contribution (DC) plans. This chapter concludes that the DC pension plan is more advisable for the rapidly ageing society in Taiwan.
