The issue of pensions versus TAP is very much in the minds of many people. While I try not to take sides, let me try to outline the history behind both schemes and probably at the same time outline why the move from pensions towards TAP happen. (Technically pension scheme is known as defined benefits or DB and TAP scheme is known as defined contributions or DC).
Pensions were introduced to Brunei with the passing of the Pensions Act (1959) and that of the Public Service Commission Act (1962) which governs the appointment of public officers. Even then not every civil servant is pensionable - for men only those in Division IV and above and for ladies only the unmarried ones and for graduates beginning 1980. (Married non-graduate ladies were appointed on month-to-month unpensionable service).
The pensions were based on the civil servant pensions in UK which first started around 1684. Pensions were introduced - at first in the navy and the armed forces and then the civil service around 1850 - in order to facilitate the retirement of older less efficient workers so as to make way for younger fitter men. The very existence of such schemes then encouraged employers to recruit younger fitter people who would work for many years before drawing their pensions.
As private sector's pay increases and the government introduced a social security system, the government retained the pensions for civil servants, the theory behind it is that the senior civil servants are paid substantially less than their private sector counterparts, and get none of their perks, such as company cars. Their pension really does matter to them.
However when it was introduced to Brunei, there were a number of differences. In 1960s, there were not many people in the civil service so a pension scheme is not a problem. Secondly, the amount of payment was based on three quarters of the last drawn salary which makes it one of the more generous scheme in the world, okay when salaries are low. Thirdly, the amount is paid for a period of 15 years and if the recepient is still alive, then the full pension is paid until he passed away. Fourthly, the private sector pay in Brunei is generally lower than the civil service. Fifth, the civil servants do not have to contribute any amount whatsoever. As Brunei civil service gets bigger, life expectancy increases, salary rises, all these made pension payments grow exponentially larger. At the same time, because of the generosity of the remuneration and pension scheme in the government, nobody wants to join the private sector in Brunei. Something has to be done.
In the 4th National Development Plan (1985-1990), the NDP committee proposed that a workers' fund be established so that workers in the private sector could also enjoy their retirement. But it was not until 1993 that TAP fund was set up. By then, the government position had changed. No longer was a workers' fund for the private sector should be set up but that the pension scheme should also be abolished even though the latter was not in the original NDP plan. TAP was to level the playing ground in terms of retirement so that more Bruneians will be attracted to join the private sector. It was also to encourage fluidity of movement from government to private sector as civil servants will have no pension to lose. TAP 5%+5% rate was supposed to be an introductory rate and was supposed to subsequently rise as people get used to it. However that rate never rose not because the government could not afford it but there were indication that the private sector could not pay any higher contribution for their workers. And so that introductory rate remained until today.
Being a public retirement fund as most retirement funds, TAP's investments tended to be in the more secure risk averse investment unfortunately with relatively lower returns. But despite that, TAP's returns to the members over the last few years have been higher than what one would get putting money in the banks.
And here we are today. We have moved from one extreme to another. Everyone wants the pendulum to move back but the finance position is that it can't. During the first session, the Second Finance Minister's position was the government has to take into account everything including the position of Bruneians in the private sector. Bringing back the same pension scheme would just be solving one problem but the other problems remained.