The Legislative Yuan yesterday passed the Act Governing Civil Servants’ Retirement, Discharge and Pensions (公務人員退休資遣撫卹法), marking a significant step in the government’s pursuit of pension reform.
The act, which is to take effect on July 1 next year, will lower the income replacement ratio for civil servants who have worked for 35 years from 75 percent to 60 percent over the course of 10 years, while the ratio for those who have worked for 15 years is to drop from 45 percent to 30 percent over the same period.
The 18 percent preferential savings rate given to public servants hired before July 1995 is to be conditionally phased out.
Photo: CNA
Retired civil servants under the “old” pension system predating July 1995 who chose monthly pension payments will no longer receive the 18 percent interest by the end of 2020.
As for retirees who had claimed their pensions in full, the interest rate is to be reduced to 6 percent in 10 years, to fill a gap between the pension floor — set at NT$32,160 — and the 60 percent income replacement ratio.
The basis for calculating civil servants’ pensions is to be adjusted based on their average salary over the final 15 years.
Civil servants on childcare leave would be allowed to retain their seniority as long as they pay a monthly fee that is equivalent to 12 percent of their salary.
The fee, used to support the pension system, is normally shared by public servants and the government at a rate of 35 percent and 65 percent respectively.
Retired civil servants would forfeit their pensions if they chose to work for a government agency or state-run foundation that gives them a monthly salary that is higher than the minimum wage.
The act allows the spouse of a former civil servant to receive 50 percent of the pension that was paid to the latter during their marriage, while widows or widowers of former civil servants could receive pensions in their late partner’s place if they were married for at least 10 years.
The age at which Aboriginal civil servants — who, according to data from the Ministry of Civil Service, have a shorter life expectancy — can retire and claim pensions has been moved forward from 60 to 55.
Speaking after the bill’s passage, Presidential Office spokesman Alex Huang (黃重諺) said the purpose of pension reform is to ensure that every citizen can have a self-sufficient life after retirement and that the government would have sustainable resources to care for them all.
It is every political party’s responsibility to see to it that pension reform is successful, and the office welcomes all valuable input and concerted efforts to achieve that aim, Huang said.
Democratic Progressive Party (DPP) spokesman Wang Min-sheng (王閔生) said the passage of the bill represented the first step toward an important reform.
However, Chinese Nationalist Party (KMT) lawmakers lamented the result, with KMT caucus convener Sufin Siluko (廖國棟) saying that the bill is unconstitutional and would not have a lasting effect.
The bill was pushed through according to the DPP’s design, despite the office holding a national congress last year to discuss the reform with its opponents, which lasted for several months, KMT Legislator Hsu Shu-hua (許淑華) said.
She said Tsai, who wants to control legislative and administrative rights, should not call any national congresses in the future, as it would be a waste of money.
Additional reporting by CNA
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