On Friday, the Examination Yuan passed an executive order to begin reform of the pension scheme for retired civil servants, military personnel and teachers.
The most controversial and talked-about feature of the reform plan is the elimination of the 18 percent preferential interest rate that is paid on the savings of retirees. The passage of the plan will undoubtedly whip up confrontation between the pan-green and pan-blue camps because civil servants and their families make up a large proportion of pan-blue support.
Discussions about abolishing the 18 percent interest rate have gone on for some time. The fact that today banks typically offer interest rates of 1 or 2 percent for savings explains why the preferential interest rate is such a bone of contention for the general public and a heavy financial burden for the government.
For President Chen Shui-bian (陳水扁), the successful implementation of this reform is especially important, as it was one of the six reforms that he mentioned during his speech on Double Ten Day.
In the past, Chen has made strenuous efforts to implement the reforms that he has promised, only to run into obstacles and setbacks. Under these circumstances, successful reform of the scheme would serve as a timely boost for the Chen government in the wake of criticism over the Kaohsiung MRT scandal and corruption allegations involving former officials.
In 1960, through two simple administrative orders issued by the then Chinese Nationalist Party (KMT) government, the practice of offering the 18 percent preferential interest rate to retired civil servants commenced. Many would agree that at that time there were unique circumstances that made the decision of the government understandable.
Political instability in the Taiwan Strait and the need to secure the support of the civil service, as well as the need to attract qualified individuals to join, were just two of these.
However, more than 40 years later, most of the factors that justified these special privileges for civil servants no longer exist. To continue with this practice constitutes a major social inequality and represents unfair distribution of resources at a time when the rights of farmers and workers in Taiwan require more attention.
What makes the situation even more complicated is the fact that while the 18-percent interest rate was initially put into practice through an administrative order, rather than through the legislature, the pan-blue camp is now arguing that any nullifying of the order should be passed by the Legislative Yuan. The irony is that if the removal of the interest rate is to be deemed as an amendment of the law, most people are stumped as to which law is to be amended, since no law was formally adopted to begin with.
When all is said and done, the Council of Grand Justices may eventually be required to make an interpretation as to whether the two administrative orders issued in the 1960s carried the force of law against a backdrop of martial law and the Constitution as it then existed. Even if the answer is no, it is not difficult to imagine that the pan-blue camp may insist that the Legislative Yuan -- where they enjoy a legislative majority -- enact a brand new retirement pension plan for civil servants. In any event, the pan-blue camp need to keep in mind that if they do intend to reinstate the preferential interest rate, they may well incur the wrath of voters not entitled to it.
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