Special rate cut may affect 220,000: military

According to the cabinet's reform proposals announced yesterday, the preferential interest rate for military personnel will be cut down gradually starting in 2016. The move is part of the government's attempts to save the country's deficit-ridden pension programs from bankruptcy.

An unidentified MND official yesterday told local media that the plan is expected to affect 31,000 active staff and another 190,000 veterans.

The MND official said that those who are entitled to enjoy the preferential interests are expected to receive 11 percent to 15 percent less than they originally could receive under the existing rules, once the plan is finalized.

The proposal, however, won't affect those retired soldiers who chose to receive their retirement pensions in a lump sum.

Also, the cabinet's proposals are expected to lower the income replacement rate for military personnel pensions to around 60 to 85 percent, from the existing 70 to 95 percent. The difference in final rates depends on a serviceperson's rank at retirement.

Higher Ranks Face Greater Impact

The MND official yesterday said those who retired with a higher rank and payroll may face a more significant impact under the reform plan.

For example, in the current system a major who has served 20 years in the military and earned NT$71,135 monthly salary before filing for retirement receives NT$51,585 per month after retirement. This is based on their existing income replacement rate, which stands at 73 percent.

In the proposed system, the major would receive NT$42,100 per month, which is NT$ 9,485 less than they are currently entitled to receive. This is based on the new income replacement rate, which would stand at around 60 percent.

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