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Retirement age of public school teachers likely to be raised

2017-06-29
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Taipei, June 28 (CNA) A series of bills that will limit the retirement benefits of public school teachers moved a step closer to becoming law on Wednesday after passing a second reading in the Legislative Yuan.

The bills, which will raise the retirement age for public school teachers and change how their monthly pensions are calculated, will be part of a new law on the retirement, pension and severance of public school teachers that consolidates several existing laws.

The measures, which must pass three readings to be enacted, are part of the government's initiative to rein in retirement benefits for public employees because their pension programs are unsustainable over the long term at their current benefit levels.

On Wednesday afternoon, the Legislature approved a measure to increase the age at which public elementary, junior high and senior high school teachers can retire with a full pension to 58, from an average of around 53 at present.

The government had wanted to raise the retirement age to 60, but agreed to set the age at 58 after reaching a compromise with the National Federation of Teachers Unions (NFTU).

The NFTU argued that the government should not compromise the quality of education because of pension reforms. It said it would be more appropriate to set the retirement age for teachers at 55.

According to the bill, teachers who have served at least 15 years and reached the age of 58 can claim a pension, but the age should be adjusted over time based on changes in average life expectancies and demographic structures.

The retirement age of faculty at public colleges and universities will be raised by one year every year until reaching 65 in 2026.

Another clause that passed a second reading Wednesday targeted one of the factors in the formula for the calculation of monthly pensions of public school teachers, which are currently based on their salary in their last month of service before retiring.

The standard will be changed when the bill takes effect to a teacher's average monthly salary in his or her final five years of service and then adjusted to average monthly salary over the final 15 years of service during a period of 10 years.

The longer the period for which the average salary is calculated, the lower it is likely to be, meaning a lower monthly pension.

Yet another clause that passed a second reading Wednesday stated the preferential 18 percent interest rate on savings for those who receive NT$32,160 per month or more in retirement income will be reduced to 9 percent from July 1, 2018 to Dec. 31, 2020, and cut to zero starting on Jan. 1, 2021.

In the case of retirees who opted for a lump sum retirement payment rather than a monthly pension, the preferential interest rate will decrease to 6 percent over a six-year period.

The bill, meanwhile, will also gradually lower the income replacement rate for pensioners who are receiving NT$32,160 per month or more.

Those with 35 years of service will see their income replacement rate drop from 75 percent to 60 percent over a 10-year period, and those with 15 years of service will see a decrease from 45 percent to 30 percent over the same period of time, according to the bill. 

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