Civil servant retirement income has multiple components
Taiwan civil servants draw retirement income from three systems:
- Public Service Insurance (公保) old-age benefit — similar to Labor Insurance; a social-insurance program
- Civil Servant Retirement — the applicable system depends on hiring date (old DB → new DB → newest DC)
- 18% preferential deposit (18% 優惠存款) — discontinued; only retirees under the oldest regime still qualify
This article focuses on the 2018 Civil Servant Retirement Act (退撫新制), effective July 1, 2018, and the newest DC system for those hired from 2023 onward.
Three generations of civil servant retirement systems
Old-old system (before July 1, 2018)
- Defined Benefit (DB)
- Accrual rate of 2.25% (per year of service)
- Income replacement rate could exceed 80%
- Paired with the 18% preferential deposit (part of lump-sum deposited at the post office at a high interest rate)
- Most pre-pension-reform civil servants were under this system
New system (July 1, 2018 – June 30, 2023)
- Still DB, but accrual rate reduced to 2% (per year of service)
- Counted service capped at 35 years
- Average monthly salary shifts to last 15 years in service (was 5 years) — 2018 law changed this, phasing from 5 to 15 years in practice
- Income replacement rate drops to 60–70%
- 18% preferential deposit no longer available for new retirees (phased out for existing retirees)
- Retirement age: "Rule of 85" (age + service ≥ 85) or age 65 alone
Newest system (for hires from July 1, 2023)
- Switched to Defined Contribution (DC) (similar to Labor Pension (勞退))
- Government contributes 15% × monthly salary
- Employee self-contributes 0–7.5%
- Account accumulates with investment returns; at retirement, annuitize or take a lump sum
- Government no longer bears long-term retirement payout liability (replacing DB's long-term fiscal burden)
Breakdown of the 2018 civil servant retirement formula
Winpie's civil servant retirement calculator uses the 2018 formula:
Monthly pension = average monthly salary × counted service × 2%
Key parameters
- Average monthly salary: average over the last 15 years in service (transitional period used 5 years)
- Monthly salary: base pay + supervisory allowance + professional allowance, etc.
- Counted service: capped at 35 years; years beyond 35 don't add to the benefit
- Minimum service: 15 years to qualify for monthly pension; below that, lump-sum only
Simple example
A civil servant:
- Average monthly salary: NT$70,000
- Service: 30 years
- Final monthly salary: NT$75,000
Calculation:
- Monthly pension = 70,000 × 30 × 2% = NT$42,000 / month
- Replacement rate = 42,000 / 75,000 = 56%
For 35 years of service:
- Monthly pension = 70,000 × 35 × 2% = NT$49,000 / month
- Replacement rate = 49,000 / 75,000 = 65%
Pension-reform adjustments to the replacement rate
The pension reform law phases down the replacement rate for already-retired civil servants:
- Retirement year 1: original replacement rate preserved
- From year 2: reduce by 1.5 percentage points per year
- Until reaching the 60% minimum guarantee
New retirees start from the 2% × service formula, which already reflects the lower post-reform benefit level.
Public Service Insurance (公保) old-age benefit — a separate system
Public Service Insurance (公保) old-age benefit is social insurance exclusive to civil servants — distinct from Civil Servant Retirement.
Eligibility
You can claim under any of the following:
- 15+ years of service AND age 65+
- 20+ years of service AND age 60+
- Other provisions in the Public Service Insurance Act
Calculation
Monthly pension (for enrollees after June 2014):
- Average monthly insured salary × service years × 0.75%–1.3% (rising with service)
- Actual months × specified coefficient
Lump sum:
- Average monthly insured salary × months per the statutory table
Generally, adding the Public Service Insurance (公保) monthly pension can lift the total replacement rate by another 10–20%. The site's tool currently only estimates the 2018 retirement portion; for Public Service Insurance see the Bank of Taiwan Public Service Insurance Division calculator.
Common questions on civil servant retirement planning
Should I take the monthly pension or the lump sum?
- Monthly pension: stable cash flow, weaker inflation protection, but you won't run out
- Lump sum: self-directed investing may earn more, but exposes you to market and longevity risk
Conservative general guidance is "mostly monthly pension with a small lump-sum portion" or all monthly. The right choice depends on your investment skills and risk tolerance.
Should I make self-contributions under the newest system?
Civil servants hired from July 2023 fall under the newest system, with 0–7.5% self-contribution available:
- Self-contributions are deductible from annual taxable income (tax benefit)
- Effectively a "retirement bonus voucher" from the government
- Particularly valuable for high marginal-tax-rate filers (20%+)
A common heuristic: if your marginal tax rate is above 5%, self-contribution is worth it; maxing at 7.5% is better (cash flow permitting).
Will pension insolvency affect me?
One goal of pension reform is reducing insolvency risk of the civil servant retirement fund. Cutting benefits in the 2018 system and switching to DC in the newest system eases government fiscal pressure. Even under strain, political commitment to top up the fund is extremely strong; actually halting payments is very unlikely.
The newest system, being a DC individual account, is unaffected by the retirement fund's financial condition — it's individual property.
Disclaimer
This article is a general introduction to the civil servant retirement systems and does not constitute retirement planning advice. The 2018 formula has been fine-tuned several times post-reform. Actual benefit rules each year are governed by announcements from the Ministry of Civil Service (銓敘部). Individual retirement planning should be discussed with a qualified professional.
Official sources
- Ministry of Civil Service (銓敘部) — civil servant retirement, severance, and bereavement programs
- Public Service Pension Fund Management Board — fund management and calculators
- Bank of Taiwan Public Service Insurance Division — Public Service Insurance old-age benefit inquiry and calculator
- Directorate-General of Personnel Administration, Executive Yuan — civil servant regulations