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Pension system safe until 2050: Taiwan official

Reforms postpone bankruptcy threat by 19 years

Minister without Portfolio Lin Wan-yi.

Minister without Portfolio Lin Wan-yi. (CNA photo)

TAIPEI (Taiwan News) – Thanks to the reforms passed by the Legislative Yuan Tuesday, the country’s pension system will not be threatened by bankruptcy until 2050, a government official said.

The need to avert financial problems for the retirement system is one of the main reasons why the administration of President Tsai Ing-wen (蔡英文) has been pushing hard for reform.

One of the key elements was the abolition of the 18-percent preferential interest rate for savings by retired civil servants, teachers and military staff, which will be completed by 2021.

The change will save NT$14.5 billion (US$477 million) in interest payments per year, said Lin Wan-yi (林萬億), the deputy convener of the pension reform commission.

The complete overhaul of unfair pensions and other changes to the system should produce savings of more than NT$700 billion (US$23 billion), he estimated.

Earlier calculations had said that the nation’s retirement system might hit bankruptcy by 2031, but the reforms had postponed such a problem until at least 2050.

The commission said that Tuesday’s decisions by the Legislative Yuan paved the way for more future legal amendments affecting teachers at public schools and officials in political positions.

Lin said that even with the savings, retired government employees, teachers and military would still enjoy a comfortable standard of living, since they would receive a larger proportion of their original salary as a pension than their colleagues in Japan, South Korea, and most of the 34 members of the Organization for Economic Cooperation and Development.