In response to James Lin's article ("Revamping the retirement system," Jan. 1, page 8), my feeling is that when thinking about how to create a reasonable and equitable pension program for civil servants and public school teachers, our first consideration should be that pensions must not exceed the incomes of active employees and we should try to reduce government expenditure on these retirees. This should be the premise for reforms.
When the Ministry of Civil Service first began to make reform plans, we made these initial calculations:
First, retired civil servants now receive a higher monthly income than colleagues who are still working. According to our calculations, if a civil servant retires after 30 years, he or she will receive 80 percent to 115 percent of the salary of those of equal rank who are still working.
For elementary and junior-high school teachers, those who retire after 30 years receive 112 percent or more of the salary of an active teacher of the same rank; a teacher who works for 35 years receives 116 percent or more. Those who worked for 40 years receive 119 percent or more.
Second, according to our estimates, in the next 30 to 50 years, the government will have to spend a total of NT$8 trillion (US$245.4 billion) on civil servants' pensions, including both old and new retirement plans. This is a heavy financial burden.
Under the old retirement scheme applicable to those who retired before June 30, 1995, the government's liabilities over the next 30 years will reach approximately NT$7.32 trillion.
That breaks down to approximately NT$2.1 trillion for civil servants, NT$2.2 trillion for teachers at the local government level and NT$3 trillion for military personnel. These figures do not include the amount to be paid to teachers at the central government level.
Under the new pension plan -- applicable to those who retired after July 1, 1995 -- the government's liabilities over the next 50 years will reach NT$1.1 trillion -- approximately NT$497 billion for civil servants, NT$392 billion for government-employed teachers, NT$190 billion for military personnel and NT$800 million for administrative officials.
A look at these expenditures on pension benefits shows us that if the current system is not quickly reformed, it could well lead to serious financial problems at the treasury.
Hopefully every sector of society will support quick and reasonable reforms capable of providing appropriate guarantees for the economic security of retired civil servants and teachers.
Lu Ming-tai is director of the Department for Retirement and Survivor Relief at the Ministry of Civil Service.
Translated by Daniel Cheng
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