The Examination Yuan on Thursday approved a draft act on civil service pension reform that aims to help the government save more than NT$8 billion (US$267 million) a year.
The draft act proposes raising the retirement age, increasing public servants’ contributions to the pension fund and reducing pension payments.
If passed, the act would take effect in 2016 and would help cut the pension fund’s embedded debt by NT$210.7 billion.
The reforms would affect an estimated 420,000 current and retired public servants, the Ministry of Civil Service said.
Currently, pensioners are guaranteed a fixed monthly income for life under a defined benefit plan.
However, the act seeks to include a defined contribution plan that would require employees to contribute a fixed amount each year or month to their pension fund.
It also proposes increasing civil servants’ contribution to the pension fund from 35 percent to 40 percent, with the government paying the remaining 60 percent.
In terms of the age of retirement, the draft proposed a “90 rule,” which means civil servants would be eligible for full retirement benefits if their age and years of service add up to 90. The current figure is 85.
The act also proposes that pension payments to civil servants be reduced from more than 100 percent of their pre-retirement salary to no more than 80 percent.
In addition, the 18 percent preferential interest rate on designated bank savings by public servants would be lowered to a maximum of 9 percent, the draft act states.
However, the National Civil Servant Association expressed dissatisfaction with the government’s plan.
It is “unfair and unjust,” the association’s chairman Lee Lai-hsi (李來希) said, and he urged the legislature to reject the act.
Calling for direct dialogue with Premier Jiang Yi-huah (江宜樺) on the government’s plan to also reform the Labor Insurance Fund, labor unions said about 15,000 workers would take to the streets on May 1, which is International Workers’ Day, to protest against the reform plan.