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Pension law draft passed by Cabinet

The Executive Yuan yesterday passed a draft bill on a national pension program in a bid to bolster the nation's social security net for the underprivileged.

Cabinet spokeswoman Chen Mei-ling (陳美伶) said that under the draft bill, which is expected to be sent to the Legislative Yuan for screening and approval within the next few days, uninsured people will be able to pay monthly premiums of NT$622 over 40 years for a total of NT$290,000. When the participant reaches the age of 65, she or he will be entitled to receive a pension of NT$7,603 per month.

The proposed legislation stipulates that participants must be between 25 and 65 years of age to qualify for the national pension mechanism.

People covered by labor insurance, military personnel and government officials will not be eligible.

A participant in the national pension scheme will have to make monthly payments over 40 years.

The bill stipulates that the total monthly payment would amount to the monthly minimum wage multiplied by a scaled insurance rate starting at 6 percent. Participants will have to contribute 60 percent of the total monthly payment, and the government will make up the remainder.

Under the draft legislation, the monthly premium will be calculated at 6 percent of the monthly minimum wage in the first year. Starting from the third year, the rate will increase to 6.5 percent with an increase of 0.5 percent every two years after that until a ceiling of 10 percent is reached.

If the fund is strong enough to cover insurance payouts for the next 20 years, the rate scales will not be raised.

"The average life span in Taiwan is 82 years, which means that a participant in the pension mechanism would be able to receive NT$1,551,012 before his or her death," Chen said.

Speaking at a press conference after yesterday morning's weekly Cabinet meeting, Chen said that an estimated 3.53 million Taiwanese would qualify for the pension mechanism.

The new pension scheme would help less privileged people while helping the government reduce debts in future, especially as the percentage of senior citizens in Taiwan is on the rise, she said.

Chen said that the proposed pension law was expected to be approved before the end of the year. If it is approved, the Cabinet would lay the groundwork for establishing the national pension system next year, so that the system could go into effect in 2009.

"The national pension mechanism is actually the combination of four subsidy mechanisms -- the subsidies for elderly citizens, farmers, Aborigines and low-income families," she said.

"Government debt is expected to be significantly reduced over the next 15 years after the national pension system has been implemented," she said.

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Veteran pension plan fair and just: minister

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