The government is looking to phase out the 18 percent preferential interest rate for civil servants and educators within six years, National Pension Reform Committee deputy convener Lin Wan-i (林萬億) said.
The armed forces pension would be handled separately and given its own set of rules, Lin said, adding that a draft of the amendments is to be reviewed by the Legislative Yuan before the first session next year.
The committee is to hold four public hearings nationwide on Saturday, Jan. 7, Jan. 8 and Jan. 14 to discuss the preferential interest rate and civil servant pensions, as well as allegations that some people have been over-quoting their years of service by adding their party member service or time as an administrative officer, Lin said.
The sessions are to be broadcast live, Lin said, adding that the committee will hold a national conference on Jan. 21 and Jan. 22.
The reforms are to take stock of the pension system and difficulties surrounding it — including differences in guarantees of minimum income; high-income replacement ratios; short average mean time calculations for salary investment into one of the four funds; low rates that cause payment problems; low age requirements for applying for a pension; severe imbalances between income and expenditure; and the inability to continue pension plans after changing jobs, Lin said.
“We also intend to look into non-standard rules, such as preferential savings rates, combining of years as a party member or years as an administrative officer into total years of service, and preferential 13 percent savings for retired employees at the four state-run banks, including Bank of Taiwan, Land Bank of Taiwan, Export-Import Bank of the Republic of China and the central bank,” he said.
The proposed reforms are to help expedite the phasing out of the 18 percent preferential interest rate, Lin said.
The phasing out period is expected to be six years. When the interest rates for educators, armed forces personnel and civil servants are less than 1 percent — as the market interest rates stand now — then the 18 percent preferential savings rate will end, Lin said.
The 18 percent preferential interest rate policy was introduced in the 1960s, when the average income of teachers, civil servants and military personnel was lower than that of other professions.
The committee plans make “basic life guarantees for elderly people” a prime consideration in the hope that the amendments will help the disadvantaged, Lin said.
“All adjustments to the preferential interest rate, income replacement ratios, the age requirement for applying for a pension and adjustment of rates will be applied gradually,” Lin said.
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