Chen denies advocating interest rate 'cut'
By Ann Yu, The China PostTAIPEI, Taiwan -- The premier yesterday denied a report claiming he used the word “cut” in reference to ex-civil servants' 18-percent preferential interest rate, in a statement released by the Executive Yuan.
January 25, 2013, 12:01 am TWN
According to spokeswoman Cheng Li-wen, Premier Sean Chen mentioned that the 18-percent preferential interest rate for some ex-civil servants was a system that requires “changes,” but he never used the phrase “should be cut.”
The premier stressed that the interest rate policy was subject to the decisions of the Examination Yuan, which the Cabinet highly respects, Cheng said, indicating that the Cabinet would not interfere with the reforms to interest rate policies.
Cheng noted that Chen said the adjustments should be based on public expectations, and that reform of the policy was a common request among the majority.
Chen said that the 18-percent policy was originally created 20 years ago to subsidize some civil servants who were mostly financially underprivileged after they retired. But as the economy allowed retired civil servants better benefits, it was clear that the 18-percent policy demanded adjustments, according to Chen.
Nevertheless, Cheng repeatedly insisted that Chen did not say “should be cut” during the interview with local newspapers.
Meanwhile, Chen also mentioned recent annuity reforms that he said required detailed planning because of the complexity of each program. He said that most benefit programs were launched several years ago according to the time and space available at the time.
With the shift of population structure over the time, including lower birth rates and aging, Chen stressed that reforms are a must. He noted that the problems could not be avoided, and should be carefully planned to make sure they are sustainable for an extended period of time.
The Ministry of Civil Service (MOCS) announced the civil servant retirement fund operations report yesterday, noting an increase in expenditure last year. In 2011, reports showed that expenditure exceeded income for the first time, posting a ratio of 107 percent. In 2012, the ratio was 118 percent. Alarmed by the numbers, officials warned that it is more than necessary to adjust the retirement programs in order for it to keep running.
The reports mentioned that the total amount of income for the civil servant retirement fund since its establishment was NT$742.6 billion and that total expenditure stood at NT$322.9 billion, or 43.49 percent of the income.
Of all pension applicants, 73.46 percent were military personnel, while teachers stood at 46.15 percent and 32.01 percent were public servants.
Minister of the Examination Yuan Kuang Chung said that in recent years, the population structure has shifted too fast for pension programs to keep up.
Although it is natural for people to demand that their portions are not cut, he said that the retirement funds would influence not just those who currently rely on them but also on future next generations.
Kuang asked people to be serious about the reform.