Mar 30, 2017 Culture Comments Off on Cabinet, Examination Yuan approve draft bills on pension reform
Taipei, March 30 (CNA) A series of draft bills were approved by the Cabinet and Examination Yuan on Thursday to reform the deficit-ridden pension system for the country's civil servants, public school teachers and private-sector workers.
Following the approvals, the draft amendments to the Labor Insurance Act, the draft statute governing the retirement pension of public school teachers and staff, and the draft bill on the retirement pension of civil servants will be sent to the Legislative Yuan for review.
The draft amendments to the Labor Insurance Act propose that the labor insurance premium rate, which now stands at 9.5 percent, be raised by 0.5 points annually, starting in 2018 until it reaches 12 percent in 2022, Vice Minister of Labor Lin San-quei (???) said at a news conference.
The calculation of workers' pensions will also be adjusted but the new formula will not be applied retroactively, Lin said.
Currently, the pension of the average worker within the labor insurance system is calculated based on the average of 60 months of the highest salary, but under the draft amendments, the 60-month factor will be changed, adding 12 months each year until it reaches 180 months, Lin said.
He said the draft amendments also strengthen the government's role in ensuring the financial sustainability of the Labor Pension Fund, as it requires the government to allocate NT$20 billion in its annual budget each year to the fund.
In addition, the government will have the ultimate responsibility of paying pensions, Lin said.
Another proposal is a new system to allow employees to combine their years of service under the Labor Insurance and other social security programs such as the public employee insurance, the military personnel insurance, the farmers insurance and national pension insurance, he said.
Such employees would become eligible for labor pension at the age of 65 after a minimum 15 years of service in total, he said.
Meanwhile, the draft law on the retirement pensions of public school teachers and other staff scraps the preferential 18 percent interest rate on savings for those who are receiving NT$32,160 per month or more in retirement pay, according to Deputy Education Minister Lin Teng-chiao (???).
For the 122,301 retirees currently in that category, the preferential interest rate will be lowered gradually over a six-year period to zero, he said.
In the case of the 10,854 retirees who opted for a lump sum retirement payment, the preferential interest rate will decrease to 6 percent over the six-year period, he said.
The deputy education minister said one of the factors in the formula for calculating the pension of public school teachers and other staff will be changed gradually from their most recent monthly salary to an average of their pay over the last 15 years of service.
In addition, the age of retirement with full pension will be set at 60, he said.
The bill proposes that the retirement age be raised by one year every year until it reaches 65, but that change will not start until 11 years after the new system is implemented, according to Lin Teng-chiao.
The draft bill also seeks to gradually lower the income replacement rate, over a 15-year period, for pensioners who are receiving NT$32,160 per month or more, he said.
Those with 35 years of service would see their income replacement rate drop from 75 percent to 60 percent, those with 30 years of service will see a decrease from 67.5 percent to 52.5 percent, and those with 25 years of service will see decline from 60 percent to 45 percent, he said.
The changes will help avert bankruptcy of the pension fund for public school teachers and staff for 19 years until 2049, the deputy education minister said, adding that the government will review the system every five or 10 years.
Meanwhile, under the draft bill on pensions for civil servants put forward by the Examination Yuan, retirees' pensions will be calculated based on their average salary in their last 10 years of service.
In addition, the income replacement rate for retirees with 35 years of service will be lowered from 80 percent to 70 percent over a 10-year period, according to the draft bill.
Lee Chun-yi (???), Democratic Progressive Party (DPP) caucus whip, said his caucus supports the Executive Yuan's proposals but not the Examination Yuan's.
He said the Examination Yuan was trying to give higher pensions to retired civil servants, which was inconsistent with the goal of ensuring the sustainability of the pension program.
The DPP caucus will present its own version of a reform bill, which will be submitted for review, along with the Executive Yuan and Examination's, next week, Lee said.
He said the DPP caucus is hoping that the reform bills will be passed during the current session of the Legislature.
(By Ku Chuan, Hsieh Chia-chen, Wen Kuei-hsiang and Y.F. Low)
Source: Focus Taiwan News Channel
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