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New pension system to start next October

Premier Chang Chun-hsiung (張俊雄) said on Friday that a much-anticipated national pension system will be put into practice on Oct. 1 of next year, creating a social security mechanism for many disadvantaged people who currently lack any pension benefits at all.

Chang made the remarks in a speech delivered at an evening party marking the 42nd founding anniversary of the Christian Tribune News, a local newspaper.

Noting that the national pension system will cover some 3.5 million people who currently lack any pension benefits, Chang said the new mechanism, coupled with the national health insurance program that has long been in place, will contribute to the establishment of a fair and just society.

The Legislative Yuan passed the National Pension Law (國民年金法) in July.

This law makes it possible for people aged 25 to 65 who are not covered by military, civil service, teachers or labor insurance programs, as well as farmers under the age of 65, to join the program.

They will be required to pay a monthly contribution based on a percentage of the national minimum wage. Contributions will be calculated on a graded scale ranging from 6.5 percent to 12 percent of minimum wage.

After retirement at the age of 65, contributors will receive a pension of up to NT$8,986 per month for the rest of their lives, a figure that will be adjusted in line with changes in the consumer price index.

Given the current minimum wage of NT$17,280, a monthly contribution of 6.5 percent of the minimum wage would amount to NT$1,123. Of this amount, a citizen would pay 60 percent, or NT$674, per month, while the government would cover the remaining 40 percent or NT$449.

After 40 years, the total amount contributed by the citizen would be NT$515,082, while the payout would amount to NT$1.83 million over 17 years, based on an average lifespan of 82 years.
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