Military, Civil Servant, and Teacher Pensions: Did This Period Go to Waste? How Is the Replacement Rate Calculated After Reform? Her Statement Sets the Tone on Back-Payment Disputes

Eight years after the implementation of military, civil servant, and teacher pension reform (nian gai), disputes remain unresolved. In late 2025, Taiwan's Legislative Yuan passed a 'halt pension cuts' bill in its third reading, and the estimated 180,000 retired military, civil servants, and teachers nationwide received back-payments for over-deducted pension amounts by August 1. However, Li Lai-hsi, former chairman of the National Civil Servants Association and a leading figure in the anti-reform movement, recently questioned on Facebook whether, although the pension arrears for January to July 2026 have provided some relief, the over-deducted amounts from 2024 and 2025 remain unsettled. On August 3, People First Party legislator Chen Chao-tzu emphasized on Facebook that laws passed in the third reading should not be reneged on: 'Pensions that should be back-paid must be back-paid!' She urged authorities not to let civil servants feel disheartened.

What is pension reform, and why is it controversial? What is the post-reform standard for replacement rates?

Pension reform took effect on July 1, 2018, gradually reducing the public servant and teacher income replacement rate from a maximum of 75% down to 60% (decreasing by 1.5% annually). However, by the end of 2025, the Legislative Yuan passed amendments to the 'Civil Servants Retirement, Dismissal, and Pension Act' and the 'Public School Staff Retirement, Dismissal, and Pension Regulations,' halting the annual reduction in retirement income replacement rates and reverting calculations to the 2023 standard. The 'pension arrears' generated between the law’s effective date (December 28, 2025) and July 31, 2026, due to recalculation, were to be back-paid by all agencies before August 1, 2026.

Legislator Chen Chao-tzu of the People First Party has been actively advocating for the pension rights of military, civil servants, and teachers. (Photo credit: Yan Lin-yu)

Could pension back-payments be reversed? Chen proposes three reform initiatives

Chen emphasized that those who apply to become civil servants do so with trust in the national system and a desire to improve society. She insisted that 'laws passed in the third reading must not be broken,' 'back-payments must be made,' and 'military salary increases must be granted according to law.' Civil servants, she argued, should not have to endure unfair treatment and indifference after years of service. Chen proposed several key reforms, calling them the most basic and necessary steps for military, civil servants, and teachers. She urged bipartisan legislators and the executive branch to work together to restore a reasonable, healthy, and dignified working environment for these personnel. Her three main proposals are:

- Institutionalize adjustments to military, civil servant, and teacher compensation with greater grassroots participation - Introduce anti-self-dealing clauses in performance evaluation systems for senior officials - Ensure grassroots members constitute a majority on performance review committees

Are over-deducted pension payments still not fully back-paid? Controversy over 2024 and 2025 arrears

Li Lai-hsi has recently posted frequently on Facebook about the issue. He confirmed that the pension arrears for January to July 2026 have finally been credited, calling the few tens of thousands of dollars the result of years of effort, providing some breathing room amid soaring prices. However, he pointed out that while minimum wages and labor insurance allowances are adjusted annually with inflation, military, civil servant, and teacher pensions continue to shrink. The current measure only returns over-deducted amounts for 2026 and halts the annual decline in retirement income, but the over-deductions from 2024 and 2025 remain unresolved. Moving forward, he said, the next step is to monitor whether retirement income will be adjusted according to inflation indices, and the next phase of advocacy will be to terminate the 10-year policy of declining income replacement rates.

On August 2, Li cited media reports criticizing that after the 'halt pension cuts' bill passed its third reading, a simple legal question—whether the new pension standards apply from 2024 or from the law’s effective date (December 28, 2025)—has been politicized by the DPP government, which misrepresents the original intent of the legislative decision. 'So, political problems must be solved politically!'