For example, a civil servant who is 65 years old and has been working for 25 years would qualify to receive retirement benefits.
The source said that since all those present at the meeting agreed to an IRR of between 75 percent and 80 percent, any retiree choosing a monthly payout would not be eligible for the 18 percent preferential savings rate and therefore no specific number should be set to minimize public confusion.
The source added that the tentative agreement was the ministry’s attempt to tie the interest rate to floating rates and put the ceiling at 9 percent.
It was also decided that the Labor Pension Fund’s income IRR would remain at its current 1.55 percent level, and that the government would allocate NT$20 billion to fill the credit gap in the Labor Pension Fund starting in 2016, with an additional NT$5 billion to be provided each following year. A maximum of NT$85 billion is expected to be injected into the fund.
A ING Securities Investment and Trust Co (ING SITC) vice president reportedly cost the Labor Insurance and the Labor Pension funds more than NT$100 million collectively in losses on investments in Ablerex Electronics Co — a power supply equipment supplier — through dummy accounts in November last year, stoking fears among employees over the safety of their pensions.
Ministry officials said that the only reform that would absolutely be enacted was that individuals who retire before the new system was implemented in July 1, 1995, would not be affected as they had lower incomes in the earlier years of their careers. They added that anyone who retired soon after the new system was implemented would also not be affected.
The group of workers that will be most affected are those in between the new and old systems who did not take out their pension in lump sums, but opted for monthly installment payouts, the ministry said. It added that there was as yet no consensus in the government as to how the system would be tweaked for this group.
Meanwhile, Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千) said that the government should not seek to change the pension system in one go and should take the review by incremental stages.
The current 75 percent IRR for military personnel, civil servants and educators is too low and any new pension system should involve a mechanism that change the IRR rates at different stages, Sun said.
It is important to consider that the reviews are being made when the pension system is at its worst and the data generated do not do justice to the system, Sun said, adding that the standards applied to the system were inappropriate.