The Cabinet and Examination Yuan on Thursday announced that they had approved draft bills to revamp pension schemes for civil servants and public school teachers taking up their posts from the middle of next year.
The draft bills, the latest step in Taiwan's years-long effort to reform its debt-ridden public pension system, must still be passed by the Legislative Yuan, and will only affect those who take up positions after July 1, 2023.
In contrast to the current system, the proposals would require public workers to make contributions into individual accounts, rather than a common pension fund, with a defined level of contributions, rather than benefits.
Monthly contributions would be set at 15 percent of a person's insured salary, of which 35 percent would be contributed by the individual and 65 percent by the government.
For example, a person earning a monthly salary of NT$40,000 (US$1,412) would have a monthly contribution of NT$6,000, of which they would pay NT$2,100 (35 percent) and the government NT$3,900 (65 percent).
Individuals can also choose to save up to double their required personal contribution, but it will not be matched by the government.
The reforms would also give public workers more control over their nest eggs, the Cabinet said, by allowing them to choose from a range of investment plans offered by the Public Service Pension Fund Management Board, based on their level of risk tolerance.
At a press conference, Cabinet spokesman Lo Ping-cheng (???) said the change from defined pension benefits to defined contributions was necessary for the stability of the public pension system.
Since the reform will result in less money going into the pension fund (from workers covered by the new scheme), the government will allocate money annually to fill the gap, so that the benefits of current public workers and retirees are not affected, the Cabinet said.
Notably, the proposal's mandatory contribution of 15 percent is more than double the six percent contribution required under Taiwan's Labor Pension System, which covers workers in the private sector.
The Examination Yuan, one of five branches of government in Taiwan, is responsible for the examination and management of all civil service personnel.(By Chen Chun-hua, Lai Yu-chen and Matthew Mazzetta)
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Source: Focus Taiwan News Channel