While savings deposit rates currently hover at a low of 1.2 percent, amendments to the Civil Servant Retirement Act (公務人員退休法) that have just come into effect mean that retired junior public servants will be able to put their money into preferential savings accounts at an interest rate of 18 percent. That is 15 times higher than the interest rate offered to the general public. While it may be a cause for civil servants and teachers to rejoice — ordinary taxpayers may find it harder to smile given that they will be paying for the difference.
The issue of preferential interest rates for public servants is an old one, promoted by the Chinese Nationalist Party (KMT) government to secure the vote of public servants by promising them rosier retirement prospects. At the time, about 10 or 20 years ago, the general interest rate was around 10 percent, not such a far cry from the 18 percent preferential rate. Nowadays, however, most people would balk at the large gap between the two.
The generous preferential rate on retirement also means that some public servants were better off in retirement than when they were receiving a salary. That is why the Democratic Progressive Party (DPP) amended the act to reduce the preferential terms, i.e. limiting public servants’ pensions to 80 percent of their previous salary.
After the KMT returned to government, it bundled the amendments to the act with the Economic Cooperation Framework Agreement (ECFA) to give the preferential savings a legal basis, although the actual rate was left unspecified. It was the Ministry of Civil Service that decided on the 18 percent rate, thereby raising civil servants’ pensions to about 95 percent of their salary. In other words, a public servant receiving a salary of NT$100,000 may well get a pension of NT$95,000 when he or she retires. Pretty good considering the state of the economy.
The government has been trying to boost the economy since it took power, albeit focused mainly on China. Despite robust trade and economic growth, unemployment has been harder to tackle and the incomes of most people have stagnated. The recent economic upturn has mostly benefited businesses and investors, while the majority of workers and small and medium enterprises can only sit and watch others get wealthier and property prices soar. How would they feel seeing these retired public servants getting 15 times more interest on their savings? The government has to be aware that there is a problem. It is one of the reasons why the Democratic Progressive Party (DPP) received more votes than the KMT in the recent special municipality elections. Where is all this public discontent coming from? It is the government’s pro-China, pro-big business, pro-civil servant policies that have made the general public feel left out.
Compare the situation with that in other countries. In the US, public workers’ pensions come out at around 80 percent of their salary, while in the UK, it is about 52 percent. The pension/salary situation is an improvement on the past, when pensions were often higher than salaries, but it remains excessive. At 2008 levels, 18 percent would mean a huge burden on already hard-pressed government finances, to the tune of NT$75.8 billion (US$2.6 billion).
A recent survey published by CommonWealth Magazine showed that 93 percent of Taiwanese are concerned about the widening wealth disparity in this country. The government’s policy bias will only deepen this inequality. Few would resent providing public servants who retired prior to 1995 the kind of lifestyle they deserve — but only if the government offers them a preferential rate that is more in line with prevailing interest rates.
The EU’s biggest banks have spent years quietly creating a new way to pay that could finally allow customers to ditch their Visa Inc and Mastercard Inc cards — the latest sign that the region is looking to dislodge two of the most valuable financial firms on the planet. Wero, as the project is known, is now rolling out across much of western Europe. Backed by 16 major banks and payment processors including BNP Paribas SA, Deutsche Bank AG and Worldline SA, the platform would eventually allow a German customer to instantly settle up with, say, a hotel in France
On August 6, Ukraine crossed its northeastern border and invaded the Russian region of Kursk. After spending more than two years seeking to oust Russian forces from its own territory, Kiev turned the tables on Moscow. Vladimir Putin seemed thrown off guard. In a televised meeting about the incursion, Putin came across as patently not in control of events. The reasons for the Ukrainian offensive remain unclear. It could be an attempt to wear away at the morale of both Russia’s military and its populace, and to boost morale in Ukraine; to undermine popular and elite confidence in Putin’s rule; to
A traffic accident in Taichung — a city bus on Sept. 22 hit two Tunghai University students on a pedestrian crossing, killing one and injuring the other — has once again brought up the issue of Taiwan being a “living hell for pedestrians” and large vehicle safety to public attention. A deadly traffic accident in Taichung on Dec. 27, 2022, when a city bus hit a foreign national, his Taiwanese wife and their one-year-old son in a stroller on a pedestrian crossing, killing the wife and son, had shocked the public, leading to discussions and traffic law amendments. However, just after the
With escalating US-China competition and mutual distrust, the trend of supply chain “friend shoring” in the wake of the COVID-19 pandemic and the fragmentation of the world into rival geopolitical blocs, many analysts and policymakers worry the world is retreating into a new cold war — a world of trade bifurcation, protectionism and deglobalization. The world is in a new cold war, said Robin Niblett, former director of the London-based think tank Chatham House. Niblett said he sees the US and China slowly reaching a modus vivendi, but it might take time. The two great powers appear to be “reversing carefully
RSS