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Military pension reform bill passes 1st reading at Legislature

2018/04/20 18:02:28

Taipei, April 20 (CNA) The Cabinet-proposed military pension reform bill passed its first reading at the Legislative Yuan Friday, amid clashes between ruling and opposition lawmakers, and will now be reviewed by legislative committees.

Ruling Democratic Progressive Party (DPP) caucus whip Ker Chien-ming (柯建銘) said committee review of the amendment to the Act of Military Service for Officers and Noncommissioned Officers of the Armed Forces will begin next Thursday.

One day before that, the Legislature will hold a public hearing on the bill, added Ker.

The DPP government's move to adjust the military pension program in an efforts to maintain the sustainability of national pension funds, has drawn fierce resistance from military retirees in the face of a plan that ultimately cuts their pensions, including rescinding a preferential 18 percent interest rate on pension savings.

A member of an anti-reform group formed by retired military personnel, called 800 Heroes, died from his injuries after climbing the wall outside the Legislature and falling during a protest on Feb. 27.

Despite opposition, the President Tsai Ing-wen (蔡英文) administration wants the amendment to become law by July 1, noting that the money saved through pension reform will keep the nation's pension systems, which were on the brink of bankruptcy, solvent for the next three decades.

Early Friday, DPP lawmakers were mobilized to ensure the military pension reform bill, proposed by the Cabinet on April 12, be passed and move to legislative committees for review.

However, opposition Kuomintang (KMT) instead demand four public hearings on the bill before sending it for committee review.

As Legislative Speaker Su Jia-chyuan's (蘇嘉全) started to announce the bill before voting could commence, two KMT lawmakers jumped onto the podium in an attempt to stop the session, sparking physical clashes between the two sides.

With its big majority, the DPP eventually succeeded in pushing the bill through the first reading.

Under the Cabinet's draft bill, which takes years of service beyond 20 years as a key factor in pension calculation, the minimum monthly pension is set at NT$38,990 (US$1,325), while the current pension program for retired military personnel has no such floor.

The proposed figure is higher than the NT$32,160 for retired civil servants and public school teachers.

In terms of the long-criticized preferential 18 percent interest rate, the bill proposes that military retirees who receive a lump sum retirement payment will see the interest rate cut to 12 percent for the first two years after the passage of the bill and then 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 fall to NT$47,997 in the first two years and further 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 salary 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.

In addition, 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.

The legislation is expected to 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, according to the Cabinet-level Veterans Affairs Council.

(By Liu Kuan-ting and Elizabeth Hsu)