Taipei, The Cabinet on Thursday proposed a military pension reform bill that takes years of service beyond 20 years as a key factor in pension calculation, with an eye to encouraging longer military service.
The proposal sets the minimum monthly pension at NT$38,990 (US$1,325), higher than NT$32,160 for retired civil servants and public school teachers set to go into effect on July 1.
If the bill is passed by the Legislature, it will affect 56,312 military retirees -- 5,050 noncommissioned officers, 49,029 field-grade officers and 2,233 general-grade officers, less than 50 percent of military retirees, who will see their pensions cut, Veterans Affairs Council Vice Minister Lu Chia-kai (???) said at a press conference.
According to the proposed bill, those military retirees who receive a lump sum retirement payment will see the long-criticized 18 percent preferential interest rate cut to 12 percent in the first two years after the passage of the bill.
The preferential interest rate will then be lowered by two percent every two years until it reaches six percent in the seventh year where it will remain.
Currently, with the 18 percent interest rate, a retiree, whose lump sum payout upon retirement is NT$3.5 million, receives monthly interest income of NT$52,500.
If the bill is passed, that payment will be lowered to NT$47,997 in the first two years and reduced in stages every two years until it reaches NT$43,493 in the seventh year.
For retirees who receive a monthly annuity payment, the bill proposes that the 18 percent interest rate be phased out over 10 years.
The amount by which individuals are impacted will depend on their salaries and years of service in the military, with the income replacement ratio capped at 90 percent for field-grade officers or general-grade officers and 95 percent for noncommissioned officers.
Under the proposal, retirees who serve 20 years will be entitled to a monthly pension equal to 55 percent of two times their salary, while the income replacement ratio will be increased by 2 percent for every extra year of service beyond 20 years.
For example, a retired lieutenant colonel, who served in the military for 24 years and was paid NT$44,730 per month, currently has a monthly pension of NT$70,797.
If the bill is passed, that monthly pension will be lowered to NT$69,353 in the first year and every year thereafter until it reaches NT$56,360 from the tenth year onwards.
Premier Lai Ching-te (???) asked Cabinet members to effectively communicate with lawmakers to ensure the bill passes in time as the Cabinet wants the reform to be in place by July 1, in tandem with the new pension systems for government employees.
The reform is designed to encourage service members to delay retirement to meet the nation's needs for well-trained and experienced personnel to serve longer in the military, Executive Yuan spokesperson Hsu Kuo-yung (???) said.
Source: Focus Taiwan News Channel