The Chinese Nationalist Party (KMT) caucus yesterday finally consented to support Premier Sean Chen (陳冲) in scaling down year-end pension benefits for government retirees at Lunar New Year next year.
With the consensus reached among KMT lawmakers, the legislature is expected to cut the benefits budget of NT$20.2 billion (US$694.1 million), included in the government’s budget statement for next year, to NT$1.14 billion when the budget bill goes to the legislative floor.
The initial budget was to be distributed to 445,708 retirees from the military, the government, public schools and state-owned enterprises who have opted to receive their retirement pensions in monthly installments instead of one lump sum. Every retiree used to receive a bonus equivalent to 1.5 months of their pre-retirement salary ahead of the Lunar New Year, similar to year-end bonuses for active civil servants.
If the budget is cut as planned, an estimated 42,000 people will still receive the bonus — retirees or the families of deceased retirees who receive a monthly retirement pension of less than NT$20,000 and families of retirees who were killed, injured or disabled in wars, on military exercises or in other public service.
The decision was made at a caucus meeting attended by 60 KMT lawmakers, out of a total of 64.
Speaking after the meeting, KMT caucus whip Wu Yu-sheng (吳育昇) said his caucus “has held in high esteem” retired military personnel, civil servants and public-school teachers, and “felt sorry” for them about the decision.
“However, in consideration of the situation the nation is in and its fiscal position, we should cut our coat according to our cloth. We have to make necessary adjustments,” Wu said.
The bonuses for government retirees, the scale of which is decided on a yearly basis, have been in place since 1972, with just a few exceptions where the government suspended their distribution or reduced the size of the bonus when the nation was in financially difficult situations.
In early October, Democratic Progressive Party (DPP) Legislator Kuan Bi-ling (管碧玲) raised doubts over the pension system, at a time when Chen appeared reticent to guarantee pensions under the Labor Insurance Fund, which is heading for bankruptcy. This highlighted the long-existing gap between benefits for the ordinary working class and civil servants, a major reason the pension was found not to be justified.
The DPP demanded that the pension system be done away with once and for all on the grounds that the legitimacy of the subsidy is also questionable.
Through the decades, distribution of the bonus was not dictated by law, but was based on a “note” the Cabinet drew up at the end of every year.
Chen only agreed that the proposed limited coverage of the bonus policy will be applicable for this coming Lunar New Year, but he has promised to institutionalize the system by enshrining it in law. He has not given a timeframe.
At the KMT caucus meeting, KMT Legislator Sun Ta-chien (孫大千), whose constituents in Taoyuan County are mostly beneficiaries of the pension, proposed that the caucus hold a secret ballot to decide on the caucus’ stance on the issue — a way in which a rejection of Chen’s reform plan could be engineered.
Sun’s proposal was voted down 11-23. After about 16 lawmakers offered opinions on the issue, with some still voicing opposing views, Wu proposed a motion to support the Cabinet proposal, which was then approved by acclamation.