Officials doubt civil servant retirement reform

With the Cabinet slated to announce the draft guidelines for the reformed annuity system by Wednesday, Examination Yuan President Kuan Chung (關中) met with President Ma Ying-jeou yesterday to discuss the issue.

Premier Sean Chen also met with President Ma yesterday to discuss pension-related reforms to the labor annuity program. The Presidential Office said Ma is concerned over issues of fairness between different industries as well as limited funds.

According to local reports, some MOE officials are critical of the newly introduced commercial insurance plan, which has been included in the civil servant insurance program.

The commercial insurance plan, which the Ministry of Civil Service (MOCS) proposed, involves the government establishing a savings account for every civil servant. In this account a portion of their monthly income will be put away for retirement.

The government collects funds which are then used in financial markets. Originally, the civil servant annuity program involved two elements: retirement pension and civil servant insurance. The government contributes a significant portion to both. These two methods will remain.

The MOCS said the addition of the commercial insurance program would lessen the government burden regarding the funding of civil service retirement.

According to the MOCS, when the new policy comes into effect, the monthly income replacement rate for civil servants would not exceed 80 percent. Further, 20 percent of the retirement funds would come from the commercial insurance program.

An MOCS official questioned the fairness of this new program, considering it similar to a mandatory investment. The official asked whether retired civil servants would still receive their portion of retirement if the commercial insurance funds failed in the market.

He also criticized the numerous attempts to make civil servant benefits similar to laborer benefits, saying such efforts have been very forceful.

The nature of each industry is very different, he said, adding that it is unreasonable to hope that every benefit program can be the same.

Meanwhile, some pan-blue lawmakers have raised questions over the 18-percent preferential interest rate levied on some retired civil servants. Although most legislators agreed to a reform, some asked that any changes be made only following actuarial assessments.

Lawmaker Lo Shu-lei (羅淑蕾) said it is easy to understand that society would be angered by civil servants receiving a preferential retirement rate while working a new, non-civil service job, citing the potential of civil servants receiving postretirement income, which includes the annuity scheme coupled with the new job, of more than NT$60,000 per month. She said there are still some disadvantaged retired civil servants who receive the preferential interest rate and have an income of roughly NT$10,000 a month.

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