The state-run Pension Fund for Defense Personnel is in dire financial straits and might go bankrupt in a few years, an official with the Ministry of Civil Service said.
Although the fund’s spending did not exceed revenue last year as had been expected, the official said the possibility of the fund going bankrupt by 2018 remained.
The official said a planned voluntary military service system would deal a further blow to the fund.
The fund’s revenues for last year amounted to NT$8.421 billion (US$263 million), compared with its spending of NT$6.365 billion, said the official, who declined to be identified.
As of the end of December last year, the fund had to pay out NT$63.33 for every NT$100 in revenue, a ministry report showed.
A voluntary military service system could incite a wave of early retirements among existing career military personnel, while newly recruited personnel might have paid NT$70,000 to their retirement fund after serving only three years, but would receive more than NT$100,000 from the pension fund when quitting under the existing rules, the official said.
To keep the pension fund from going broke, the government should increase its contribution rate for military personnel from 12 percent to a range between 30 percent and 40 percent, he said.
Should the contribution rate for individuals be raised, the portion contributed by the government should also be raised, which would further worsen its finances, he said.
Over the long term, adjustments in the military’s retirement system will be necessary to improve the situation, the official said.
At present, the nation’s military personnel on average are entitled to receive retirement pay 8.29 times the total amount of money they pay into their pension funds, higher than the 5.97 times for teaching staff and the 5.43 times for government employees, the ministry said.
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