Lawmakers approved pension reform bills for civil servants, public-school teachers and political appointees last week, with the controversial 18 percent interest rate applicable to portions of the pensions of retired civil servants and public-school teachers to be conditionally phased out over the next few years.
This naturally begs the question: Why do retired employees of state-owned or state-controlled banks still receive 13 percent interest? Should the government also take action on this issue?
The 13 percent savings rate has long raised concern over the financial burden placed on such banks, but what has particularly raised eyebrows is that there is an increase in perceived economic inequality and relative deprivation.
Minister of Finance Sheu Yu-jer (許虞哲) on Friday said the government would soon address the 13 percent preferential rate by gradually decreasing it to less than 6 percent over a six-year period for retirees of the Bank of Taiwan, the Land Bank of Taiwan, the Export-Import Bank of the Republic of China and the central bank.
Apart from these four state-owned institutions, several banks in which the government holds majority control also provide their retirees with the subsidized rate.
The preferential savings rate underwent two reforms under former president Chen Shui-bian’s (陳水扁) administration, with employees hired after 2008 no longer entitled to such a rate.
This policy was implemented to address difficult circumstances at the time, but there is little justification for such a policy to continue.
It is expected that retirees and unions at state banks will present their demands soon and might launch protests if the government tries to change the preferential rate, similar to protests seen during the reform process for civil servants’ and teachers’ pensions over the past several months.
They are not the only retirees who want to retain these sorts of privileges — everyone who depends on interest payments wants to be treated the same way.
Everyone knows reform is painful, but necessary. The questions are how to proceed and who is willing to tackle it.
However, the inevitable question is: Why are the interest rates on regular savings accounts so low?
One explanation is due to low inflation expectations, which is attributable in part to the success of the central bank’s commitment to low and stable inflation.
However, as real interest rates — allowing for the change in the level of prices — have also fallen, it seems to reflect a slim chance for long-term economic growth, given the effects of such factors as aging and declining productivity.
The central bank has clearly tried to maintain a policy that supports economic growth. This poses the question of whether the low-rate situation is a new normal and if interest rates are to be determined by market fundamentals, or just by the government’s policies.
While the advantages of lower rates are encouraging businesses to borrow and consumers to buy, which to some extent supports economic recovery, the disadvantages have nowhere to hide.
Insurance companies are likely suffering less profitable investments and most savings account holders are earning lower interest, which in turn restricts their spending and overall economic activity.
Banks hold excessive savings, but have weak business investments, which leads to weaker productivity growth. Is a low interest-rate policy to boost the economy still justifiable?
China’s supreme objective in a war across the Taiwan Strait is to incorporate Taiwan as a province of the People’s Republic. It follows, therefore, that international recognition of Taiwan’s de jure independence is a consummation that China’s leaders devoutly wish to avoid. By the same token, an American strategy to deny China that objective would complicate Beijing’s calculus and deter large-scale hostilities. For decades, China has cautioned “independence means war.” The opposite is also true: “war means independence.” A comprehensive strategy of denial would guarantee an outcome of de jure independence for Taiwan in the event of Chinese invasion or
A recent Taipei Times editorial (“A targeted bilingual policy,” March 12, page 8) questioned how the Ministry of Education can justify spending NT$151 million (US$4.74 million) when the spotlighted achievements are English speech competitions and campus tours. It is a fair question, but it focuses on the wrong issue. The problem is not last year’s outcomes failing to meet the bilingual education vision; the issue is that the ministry has abandoned the program that originally justified such a large expenditure. In the early years of Bilingual 2030, the ministry’s K-12 Administration promoted the Bilingual Instruction in Select Domains Program (部分領域課程雙語教學實施計畫).
Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) earlier this month said it is necessary for her to meet with Chinese President Xi Jinping (習近平) and it would be a “huge boost” to the party’s local election results in November, but many KMT members have expressed different opinions, indicating a struggle between different groups in the party. Since Cheng was elected as party chairwoman in October last year, she has repeatedly expressed support for increased exchanges with China, saying that it would bring peace and prosperity to Taiwan, and that a meeting with Xi in Beijing takes priority over meeting
Philippine Department of Foreign Affairs spokesman for maritime affairs Rogelio Villanueva on Monday said that Manila’s claims in the South China Sea are backed by international law. Villanueva was responding to a social media post by the Chinese embassy alleging that a former Philippine ambassador in 1990 had written a letter to a German radio operator stating that the Scarborough Shoal (Huangyan Island, 黃岩島) did not fall within Manila’s territory. “Sovereignty is not merely claimed, it is exercised,” Villanueva said. The Philippines won a landmark case at the Permanent Court of Arbitration in 2016 that found China’s sweeping claim of sovereignty in
RSS