UPDATE: Bill to phase out 18% preferential pension interest rate passes second reading

The China Post and CNA

TAIPEI, Taiwan — The Legislative Yuan gave the second reading to a bill on pension reform that would phase out the preferential interest rate in two years.

If the bill passes third reading, the rate would be lowered to 9 percent in the first year and drop to zero in the second year for those who withdraw their pension monthly. For those who choose to claim their pension in one lump sum, the interest rate would be cut to 12 percent in the first year and further reduced by 2 percent every other year until it drops to 6 percent in the seventh year.

However, public sector workers receiving monthly pensions of less NT$32,160 would be able to retain an 18 percent preferential interest rate, according to the bill.

According to the government’s estimation, the new policy will help save NT$28.5 billion in pension payment in 50 years.

The Legislative Yuan decided to extend the plenary meetings of its current extraordinary session, which usually meet from 9:00 a.m. to 6:00 p.m., to midnight on Friday, in the hope of reviewing and passing three draft bills on pension reform as soon as possible.

Lawmakers will use the extra time to review draft bills on retirement pensions, severance pay and compensation for public servants, public school teachers and political appointees, said Lee Chun-yi (李俊俋), a caucus whip of the ruling Democratic Progressive Party, on Friday.

Lee said the objective was for the bills would clear the Legislature no later than next Tuesday.

“We hope the review can be accelerated,” he said, “the ultimate goal is to complete the legislation next Monday.”

The Legislative Yuan is holding an extraordinary session, in which lawmakers have been tasked with debating major bills related to pension reform and the government’s Forward-looking Infrastructure Development program.

From Friday to July 5, each sitting will run from morning to midnight to ensure the review process is completed before the second session of the year opens in September, Lee said.