FAIR SYSTEM:The party’s plan includes changing the income replacement ratio, salary base for calculating pensions and funding for different pension systems
By Chris Wang / Staff reporter
The Democratic Progressive Party (DPP) plans next week to unveil its pension reform proposal with its emphasis on “social solidarity,” to rival the Executive Yuan’s reform plan, DPP Chairman Su Tseng-chang (蘇貞昌) said yesterday.
“The [President] Ma Ying-jeou (馬英九) administration’s pension reform has dragged on for too long. The DPP has its own version of pension reform, which is based on social solidarity, and will unveil the plan next week,” Su said on the sidelines of a campaign stop in Greater Taichung.
Led by Lin Wan-i (林萬億), executive director of the DPP’s think tank, the party has worked on the proposal for months.
Meanwhile, the Cabinet’s task force has also been working on its proposal, led by Vice Premier Jiang Yi-huah (江宜樺).
While the direction of the government’s reform plan remains unknown, DPP sources said that the party’s proposal would lower the income replacement ratio for military, civil and education personnel from about 90 percent to 60 or 70 percent.
The interest income of civil servants who enjoy an 18 percent preferential rate on their savings account will be counted as part of their replacement income, under the DPP’s plan.
That means the DPP would no longer demand that the 18 percent preferential interest rate be scrapped, in the hope that this would ease concern among civil servants that they have become scapegoats in the quest for pension reform.
The DPP would also propose that the base salary in any pension program should be based on the average salary during a person’s entire professional career, instead of just the last year or last few years of their career, which is how the civil servants’ pension is calculated now, sources said.
The proposed formula would be fairer to all, as opposed to favoring only civil servants, whose salary tends to increase along with their number of years of service.
The party also supports a comprehensive review of the different funding allocation rates for various pension systems to ensure fairness.
Currently the government is responsible for 65 percent of the civil servants’ insurance premiums, 40 percent of the national pension program and 70 percent of the farmers’ pension program.
While employers of private workers are obligated to pay for 70 percent of their labor insurance premiums, private schools are only responsible for 32.5 percent of the faculty’s retirement pension.
Additionally, the DPP does not support canceling the pension program for the elderly because the program is designed to ensure the financial security of senior citizens, sources said.