The legislature yesterday passed a resolution reinstating the 18 percent special interest rate on savings for retired civil servants, military personnel and teachers, overriding a Cabinet executive order that reduced the retirement benefits scheme for government employees.
Under the previous 18 percent special interest rate scheme designed in the late 1950s, the income replacement rate -- post-retirement income compared with pre-retirement income for government employees -- was as high as 115 percent.
On Feb. 16 this year, the Cabinet passed a proposal modifying the interest rate to a more reasonable 90 percent maximum, but the proposal met with strong opposition from Chinese Nationalist Party (KMT) and People First Party (PFP) lawmakers.
The Cabinet's proposal was invalidated immediately after the legislature passed yesterday's resolution, which also demanded that the government compensate the beneficiaries of the system for the loss of interest they have incurred over the past 10 months.
Meanwhile, lawmakers yesterday agreed on the adoption of a new 18 percent preferential interest rate system for retired civil servants, military personnel and teachers, with the related amendments being placed on Friday's legislative agenda for approval.
Because of the difference in calculating a beneficiary's seniority, the new system, which is scheduled to start on Feb 16, will cost the government NT$2 trillion (US$61 billion) for taking care of 342,083 retired government officials by 2048.
The new system is expected to cost NT$38 million less than the previous system.
In related news, the legislature yesterday passed an amendment to the Fundamental Education Law (
The regulation, however, did not stipulate penalties for teachers who broke the law.