A top official in charge of civil service affairs said on Thursday that the government plans to raise the age at which civil servants can retire, as it seeks to slash government spending on retirement benefits and other expenses in the economic downturn.
Examination Yuan President John Kuan (關中) said the first priority for reforming the civil servant retirement system is to raise their retirement age, by following the “rule of 90” approach.
Under the “rule of 90,” a civil servant can only retire if their age and years in service add up to 90. For example, a civil servant who has reached the age of 65 and who has been working for 25 years is eligible to retire.
Currently, civil servants can retire if their age and years of service add up to 85.
By raising the retirement age, it is believed the government can save money by not having to hire new staff and not having to pay large amounts in retirement benefits at the same time.
In Taiwan, civil servants who retire can receive about 90 percent of their pre-retirement income, Kuan said. That is higher than in most countries, which pay no more than 70 percent.
Kuan said the ministry would also close other loopholes in the system, such as banning the practice of “buying” one’s years in service.
In terms of the preferential interest rate civil servants can earn from their bank savings, the minister said the rate would be lowered to reflect the government’s wish to “exclude the rich” and to “take care of the disadvantaged.”
He said that the controversial 18 percent interest rate that was once offered to Taiwan’s civil servants was scrapped in 1995.
Kuan said the planned measures are “relatively mild” compared with those of Greece. He said that the Greek government axed 20 percent of its civil servants and reduced their pay by 12 percent to deal with its debt problem.
Taiwan’s hidden debt is estimated at 150 percent of GDP, compared with Greece’s 160 percent, Kuan said.
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