Sat, Jan 08, 2011 - Page 2 News List

Preferential rates debate escalates

By Shih Hsiu-chuan  /  Staff Reporter

The Ministry of Civil Service yesterday placed ads in a local newspaper firing back at criticism leveled by the Democratic Progressive Party (DPP) regarding preferential interest rates for retired servicemen, public servants and teachers.

It was a “distorted and false” accusation made by the DPP that the Chinese Nationalist Party (KMT) government recently “reinstated” the 18 percent special interest rate because it was not abolished in 2006 when the then-DPP administration revised the policy, the ads said.

The longstanding dispute came to the fore when the KMT caucus late last month pushed through a bill in the legislature that allows retired servicemen, public servants and teachers to deposit more money into their -preferential-rate accounts starting this year.

In 2006, the then-DPP government revised the retirement system by capping the income replacement rate — post-retirement income compared with pre-retirement income — at 95 percent, down from 115 percent when the system was introduced in the 1950s.

According to the ministry, the DPP’s scheme kept the preferential interest rate in place and restricted the amount of money the retirees could deposit in the savings accounts, which have an 18 percent interest rate, an amendment that favored senior officials, while cutting the benefits of those with lower salaries and those who had long years of service.

The new measure was aimed at rectifying the flaws in the DPP’s scheme, the ministry added.

On Thursday, Examination Yuan President John Kuan (關中) created a firestorm when he spoke in defense of the KMT policy and said that “not everyone can make it as a public servant. The government is duty bound to encourage people who have the capability and to protect their interests.”

The 18 percent preferential interest rate program was implemented to address the disadvantages associated with public service, as most public functionaries received low salaries when in service and got small pensions after retirement, he added.

Kuan also issued a statement later yesterday expressing regret that his remarks on Thursday were distorted by some local media, which in turn created a misunderstanding.

Meanwhile, KMT Legislator Lin Tsang-min (林滄敏) called on the DPP not to damage the reputation of retired public servants, since their benefits were based on rules and regulations.

At a separate setting yesterday, DPP Legislator Chen Ting-fei (陳亭妃), noting that Kuan himself was a KMT official turned civil servant, said according to related regulations, the years Kuan served for the KMT would be combined with the years he serves as a public servant.

In other words, Kuan currently receives about NT$95,000 in monthly retirement funds and when the amendment comes into effect, Kuan will receive an additional NT$20,000, for a total of NT$115,000 per month, Chen said.

“In view of the nation’s worsening uneven distribution of wealth, the reintroduction of the act will inflame the public’s dissatisfaction and lead to complaints,” DPP Legislator Wong Chin-chu (翁金珠) said.

ADDITIONAL REPORTING BY RICH CHANG

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