Will the Suspension of Public Servant Pension Cuts Provide Immediate Relief? Li Lai-hsi Highlights Shocking Price Surges, Laments 'Struggles of Grassroots': Official Inflation Index Seems Off

The military, civil service, and education pension reform (pension reform) is approaching its eighth year since implementation. A major shift occurred after Taiwan's Legislative Yuan passed the 'freeze on public servant pension cuts' bill in late 2025. Recently, the Ministry of Civil Service completed its re-evaluation of pension replacement rates and has begun sending out the 'New Retirement and Pension Benefit Approval Notices' to affected individuals. The back payment of pensions for civil servants is expected to be completed by August 1, 2026.

In response, Li Lai-hsi, a leading figure in the anti-pension reform movement and former chairman of the National Civil Servants Association, shared his personal experience with inflation on Facebook on the 23rd. He questioned the accuracy of the Directorate-General of Budget, Accounting and Statistics' (DGBAS) consumer price index (CPI), criticizing that the government continues to use this seemingly distorted data as the basis for salary adjustments and pension recalculations, leaving retirees feeling helpless.

What is the new standard for pension replacement rates after the suspension of cuts? When will the pension arrears be credited?

Following the 2018 pension reform, public servants' pension replacement rates were gradually reduced from a maximum of 75% to 60%, with a 1.5% annual decrease. However, in late 2025, amendments to the 'Civil Servants Retirement, Displacement, and Pension Act' and the 'Public School Staff Retirement, Displacement, and Pension Regulations' were passed, halting the annual reduction of pension benefits effective from January 1, 2024. Instead, the replacement rate will revert to the 2023 standard for uniform calculation.

According to statistics from the Ministry of Civil Service, approximately 180,000 retired civil servants across Taiwan are subject to re-evaluation. With the re-assessment now complete, the 'pension arrears' generated between the law's effective date (December 28, 2025) and July 31, 2026, will be back-paid by all relevant agencies no later than August 1, 2026.

Has Taiwan's inflation rate exceeded the 2% warning threshold? What is the DGBAS's stance?

Meanwhile, the Executive Yuan's DGBAS forecasted in May that this year's consumer price index (CPI) annual growth rate would be 1.93%. However, due to factors such as international oil prices, inflationary pressures may intensify again. Recently, the Chung-Hua Institution for Economic Research (CIER) projected that Taiwan's CPI this year will reach 2.02%, already surpassing the 2% inflation warning line. On the 22nd, DGBAS officials attending a CIER press conference stated that the overall CPI is expected to remain above 2% in the second half of the year. They emphasized that the public should not overly focus on the 2% inflation threshold, as the key issue lies in whether wage growth outpaces inflation.

Is the DGBAS's price index accurate? A small bowl of noodles now costs 150 NTD.

Li Lai-hsi shared on the 23rd that he purchased two small bowls of takeaway udon soup, each priced at 150 NTD—10 NTD more than just a few days prior. He recalled that he started eating at this shop when the price was only 90 NTD. Reviewing the shop's historical menu prices, he noted that prices are adjusted approximately every six months. 'The menu paper is still quite new,' he said, highlighting the rapid pace of price increases. He further pointed out that prices in Hualien have skyrocketed, with stinky tofu in Yuli now priced at 110 NTD—higher than in Taipei. Noodle dishes like mee sua have also surged in price. 'Life is tough for ordinary citizens,' he lamented.

He criticized the DGBAS's CPI, which reports only 'slight increases,' as clearly inaccurate and disconnected from reality. 'When you check your wallet and then look at prices, it's truly frustrating,' he said. He argued that this validates the legitimacy of halting pension cuts, warning that 'if deductions continue, grassroots retired civil servants simply won't be able to survive!'

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