Pension reform should target cuts at former high-ranking officials, while taking care of the interests of lower-ranking officials, New Power Party (NPP) lawmakers said yesterday as the party caucus announced its plans for civil servant pension reform.
“Because the purpose of pensions should be to enable civil servants and other government employees to maintain their livelihoods after they retire, our hope is that pension reform will lessen the effects of salary gaps while making the system sustainable,” NPP Executive Chairman Huang Kuo-chang (黃國昌) said, adding that government employees with longer careers in public service should still be given relatively higher salary replacement ratios.
The NPP’s plan intends to use civil servants’ base salary and any rank-related “professional allowances” as the foundation for pension calculations, rather than the current system, which doubles the base salary to give a base.
Photo: CNA
Changing the formula is necessary to ensure that higher-ranking officials are hit with proportionally greater cuts, Huang said.
The average “replacement ratio” would fall as low as 50 percent for high-ranking officials, while reaching up to 70 percent for lower-ranked employees, he said.
“Our concern is that the Examination Yuan’s version will lead to high-ranking officials being protected even as lower-ranking officials face cuts,” NPP caucus convener Hsu Yung-ming (徐永明) said.
The national median disposable income — which is about NT$22,208 per month, according to party-provided figures — should be used as the floor for cutting retired officials’ access to the controversial 18 percent preferential savings rate, Hsu said.
“Reform should include discussions about reducing differences across professions,” Hsu said, adding that the 18 percent interest rate would be eliminated in three years according to the party’s plans, instead of six years as proposed by the Executive Yuan.
The NPP’s version would also require the government to pay pension contributions while civil servants are on maternity leave, while ex-spouses would be eligible for up to half of the pension benefits if they were divorced prior to the public servant’s retirement.
Separate plans will be promulgated for teachers and military personnel, Huang said, calling for an automatic sustainable benefit adjustment mechanism to be included in the reforms, while also appearing to back away from NPP promises to push for a universal base pension.
“Because the conveners of legislative committees control what bills will be reviewed, we have to cooperate with the government in its basic direction and pace in pushing pension reform,” Huang said, when asked when the party would propose universal base-pension legislation.
The Democratic Progressive Party has already made clear that a universal base pension would not be on its near-term pension reform agenda, he said.
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