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  • Interpretation
  • No.717【Case concerning reduction of the amount of deposit on public insurance pension benefit concessions】
  • Date
  • 2014/02/19
  • Issue
    • Is it unconstitutional to limit the ceiling of the retirement income of public functionaries and the retirement of school teachers and staff to reduce the original amount of the deposit preferential provisions?
  • Holding
    •        Article 3-1, Paragraphs 1-3 and Paragraphs 7-8 of the Operational Guidelines Governing the Public Insurance Pension Payment Amount Preferential Deposit to Retired Public Functionaries, which was amended on January 17, 2006, effected on February 16, 2006 and abolished on January 1, 2011 by the Ministry of Civil Service, and Article 3-1, Paragraphs 1-3 and Paragraphs 7-8 of the Operational Guidelines Governing the Public Insurance Pension Payment Amount Preferential Deposit to Retired School Teachers and Staff, which was amended on January 17, 2006, effected on February 16, 2006, and abolished on January 1, 2011 by the Ministry of Education, relating to the monthly retirement income for persons on monthly pensions, stipulating that it may not exceed a certain proportion of the retirement income due to persons currently employed in a similar post and at a similar level, deducting the preferential treatment on deposits granted by the public insurance pension payment, does not touch on the principle of prohibition of retroactive law. Before the abolished foregoing provisions became effective, the preferential interest on deposits for retired or serving civil servants and educational personnel indeed deserved to be upheld so as to protect reliability of interest. Changes to the above regulations were in fact carried out after consideration of the public interest and took into account the public interest sought and the necessity to protect the reliability of interest of retired or serving personnel and teachers. The measures taken by the above regulations did not go beyond the level of what was necessary or reasonable and did not infringe the principle of reliability of interest or that of proportionality.
  • Reasoning
    •        The principle of legitimate expectation touches on the stability of the legal order and dependability of the state’s actions. It forms an important part of government by the rule of law. Its purpose is not solely limited to protecting the people’s interests. Rather it also has the goal of realizing the public interest. The legitimate interest or legal status which the people can rightly expect to attain according to laws and regulations is a matter of the realization of a reliability that is objectively demonstrable and not purely a matter of desire or expectation. This is what merits protection (see Judicial Yuan Interpretation No. 525). The people’s reliability of interest is what should be protected. When laws and regulations are changed (clarified, amended or abolished), without prejudice to the principle of prohibition of retroactive law, regarding a legal status that people already enjoy (see Judicial Yuan Interpretation No. 529) or an expected interest (see Judicial Yuan Interpretation No. 605), apart from cases involving special consideration with respect to constitutional order (see Judicial Yuan Interpretation No. 589), in principle the state has the inherent room to decide whether or not to maintain, and how to maintain, that interest. All that must be considered is whether the people have a reliable expectation based on the old law that merits protection or not and whether or not it conforms to the principle of proportionality. 
      
    •        Laws and regulations that grant financial interests to the people and that carry a pre-determined period of applicability, within the said period of time should be accorded a relatively high level of trust. Unless there is an urgent matter of public interest, they should not be curtailed. Should new regulations be issued after the expiry of the said period of time then the issue of reliability does not arise. When no period of applicability is mentioned, and if objectively the object of the regulation could expect continuation of applicability—and this can usually be shown by a person’s disposition of life and activity—then protection of the reliability of such an interest must be based on changes brought about owing to the necessity of the public interest. Whenever the necessity of the public interest requires changes to laws and regulations, there must still be a response to the clash provoked thereby with protection of the reliability of interest that should be granted to the objects falling within the scope of the regulations. Besides the requirement to avoid a complete cessation of all privileges granted, in examining the level of reductions to be made, one should also consider making such reductions in installments and taking into account differences in the capacity of the objects falling within the scope of the regulations, so as to prevent excessive harm to their reliability of interest.
      
    •        Observing that the retirement income of public functionaries was rather low, the Ministry of Civil Service released the Operational Guidelines Governing the Public Insurance pension payment amount preferential deposit to Retired Public Functionaries (hereafter the Operational Guidelines One) on December 17, 1974 (abolished on January 1, 2011, hereafter the disputed Operational Guidelines One). Hereafter, on July 1, 1995, the new pension system was implemented. The manner of calculating the pension fund was raised by an equal amount of the then current year. This led to some persons receiving monthly pensions from the old or new pension systems or even both at the same time. When the monthly income from the preferential deposit rate under the public insurance fund was added on, their monthly pension was higher than the monthly income of serving personnel of the same rank. This was manifestly unreasonable. As a result, on January 17, 2006, the Ministry of Civil Service amended Article 3-1 of the Operational Guidelines One (see the general information to legislative amendment of Article 3-1 of the Operational Guidelines Governing the Public Insurance pension payment amount preferential deposit to Retired Public Functionaries) whose Paragraphs 1-3 and Paragraphs 7-8, respectively, state “that the monthly income of retired public functionaries who are paid a monthly pension shall not exceed the upper limit of a proportion of the retirement income due to persons currently employed in a similar post and at a similar level. Calculation of the upper limit of this proportion is as follows: (1) For those whose years of service at retirement are determined to be 25 years or below, the upper limit is to be 85%; for those whose years of service at retirement are determined to be more than 25 years, for each additional year, the upper limit is to be increased by 1% with a maximum of up to 95%. For those who have completed six months but not yet one year, the rate is to be calculated as one year. (2) For part-time employees of grade 12 and above, or its equivalent, who have a post of administrative leadership as set out in the regulations of the Civil Service Pay Act, whose years of service at retirement are determined to be 25 years or below, the upper limit is to be 75%; for those whose years of service at retirement are determined to be more than 25 years, for each additional year, the upper limit is to be increased by 0.5% up to maximum of 80%. For those who have completed six months but not yet one year, the rate is to be calculated as one year. But those who choose to calculate the bonus due to executive appointments according to Article 6, Paragraph 2, Subparagraph 2, Item 2 of the Operational Guidelines One should calculate the upper limit of the percentage of retirement in accordance with the preceding paragraph. “The monthly retirement pension of persons referred to in the above Article, whose monthly retirement income exceeds the upper limit of the percentage of retired income, under the premise that retirement income under the Civil Service Retirement Act is not altered, may deduct the sum deposited in the preferential deposit program so as not to exceed the upper limit of the percentage of retirement income.” “When the sum of the preferential deposit calculated in accordance with the provisions of the preceding Article is higher than the amount of the retirement income calculated in accordance with Article 2 and Article 3 of the Operational Guidelines One, the preferential deposit should be handled according to the latter, lower sum.” “The Operational Guidelines One regulated that a public functionary who retires before the enforcement of the Operational Guidelines One and whose preferential deposit expired after the enforcement of the Operational Guidelines One shall verify the stipend depending on the last position he/she held and on approval by the service agency he/she last worked in according to Subparagraph 2 of the preceding Paragraph. Beside the technical and professional additional pay calculated by the limits set out in Subparagraph 2, Item 2 of the preceding Paragraph, the monthly retirement income and emoluments offered to current employees of the same rank shall be calculated according to the standards of basic salary under the Operational Guidelines One and the instructions for calculating the monthly retirement income and the emolument granted to serving personnel of the same rank as last held by the retiree set out in the current (or of the previous year if the Guide for the current year has not yet been finalized) Guide Governing the Year-End Working Performance Bonus (condolence payments) to Military, School teachers and Staff. However, should retired public functionaries believe that it would be more in their interest to follow the norms of emolument promulgated in this regulation, rather than calculating the income due their supervisory post according to Subparagraph 2, Item 2 of the preceding Paragraph and they are able to produce evidence as well as approval in fact by the last organization in which they served, then they may make the calculation in accordance with this more favorable norm. “Retired public functionaries referred to in the preceding Paragraph who receive a monthly retirement income exceeding the upper limit of the percentage of retirement income calculated according to the percentages outlined in Paragraph 1 of this Article, deducting the sum deposited in the preferential deposit program of their pension payment, so that it does not exceed the percentage of retirement income, and who also receive a partial monthly retirement payment should calculate their monthly pension according to Paragraph 4 of this Article. However, those whose sum deposited is lower, should take the original sum deposited as the limit” (hereafter the disputed Regulation One). This limits the sum of the preferential deposit granted by the insurance and pension of public functionaries after their retirement. For the same reason, the Ministry of Education on February 3, 1975, released the Operational Guidelines Governing the Public Insurance pension payment amount preferential deposit to retired School Teachers and Staff (abolished on January 1, 2011; hereafter the disputed Operational Guidelines Two); subsequently, due to the implementation of the new pension system regulated by the Regulations of the Statute Governing the Consolation Payment to Surviving Dependents at the Death of School Teachers and Staff for school staff Pension, the Ministry of Education also on January 27, 1996, amended Article 3-1, Paragraphs 1-3, and Paragraphs 7-8, respectively, of the Operational Guidelines Two which took on February 26, 1996, stating that “the monthly income of retired public functionaries who are paid a monthly pension shall not exceed the upper limit of a proportion of the retirement income due to persons currently employed in a similar post and at a similar level. Calculation of the upper limit of this proportion is as follows: (1) For those whose years of service at retirement are determined to be 25 years or below, the upper limit is to be 85%; for those whose years of service at retirement are determined to be more than 25 years, for each additional year, the upper limit is to be increased by 1% with a maximum of up to 95%. For those who have completed six months but not yet one year, the rate is to be calculated as one year. But teachers or principals who have served for a full 35 years and who have a record as a teacher of thirty years and who when applying for retirement calculate their unbroken service as a teacher or principal for a further five years or more, and who have an outstanding record, from the thirty-sixth year on, add 0.5% for each additional year up to a maximum of 97.5%. For college and university principals or teachers concurrently holding administrative posts equivalent to public functionaries concurrently holding executive posts of the twelfth rank or above, whose years of service at retirement are determined to be 25 years or below, the upper limit is to be 75%; for those whose years of service at retirement are determined to be more than 25 years, for each additional year, the upper limit is to be increased by 0.5% per year up to a maximum of 80%. For those who have completed six months but not yet one year, the rate is to be calculated as one year. Persons to whom the increased pension applies, from the thirty-sixth year on, add 0.5% per year up to a maximum of 40 years, with an upper limit of 82.5%. But those who according to Article 6, Paragraph 2, Subparagraph 3, Item 2 of the Operational Guidelines Two choose to add their administrative service, should calculate the upper limit of the percentage of retirement in accordance with the preceding paragraph.” “The monthly retirement pension of persons referred to in the above Article, whose monthly retirement income exceeds the upper limit of the percentage of retired income, under the premise that retirement income under the Act Governing the Retirement of School Teachers and Staff, is not altered, may deduct the sum deposited in the preferential deposit program so as not to exceed the upper limit of the percentage of retirement income.” When the sum of the preferential deposit calculated in accordance with the provisions of the preceding Article is higher than the amount of the retirement income calculated in accordance with Article 2 and Article 3 of the Operational Guidelines Two, the preferential deposit should be handled according to the latter, lower sum.” “Educational personnel who have already retired before the application of this regulation, for whom the term of their preferential deposit is complete and yet continues to exist after the application of this regulation, enjoy the benefits granted in Subparagraph 2 of the preceding Paragraph applicable to their last place of work. The level of income of their pension should be verified according to the last position he/she held and on approval by the school where they last served. The monthly retirement income and condolence payments of retired school teachers and staff shall be calculated according to the standards of basic salary under the Operational Guidelines Two and the instructions for calculating the monthly retirement income and the emolument granted to serving personnel of the same rank as last held by the retiree set out in the current (or of the previous year if the Guide for the current year has not yet been finalized) Guide Governing the Year-End Working Performance Bonus (condolence payments) to Military, School teachers and Staff. However, should retired educational personnel believe that it would be more in their interest to follow the norms of emolument promulgated in this regulation, rather than calculating the income due their supervisory post according to Subparagraph 2, Item 2 of the preceding Paragraph and they are able to produce evidence as well as approval in fact by the last organization in which they served, then they may make the calculation in accordance with this more favorable norm. “Persons referred to in the preceding Paragraph who received a monthly retirement income exceeding the upper limit of the percentage of retirement income calculated according to the percentages outlined in Paragraph 1 of this Article, deducting the sum deposited in the preferential deposit program of their pension payment, so that it does not exceed the percentage of retirement income, and who also receive a partial monthly retirement payment should calculate their monthly pension according to Paragraph 4 of this Article. However, those whose sum deposited is lower, should take the original sum deposited as the limit” (hereafter the disputed Regulation Two). This limits the sum of the preferential deposit granted by the insurance and pension payments of teachers and staff at educational establishments after their retirement. Given that the disputed Regulations One and Two (hereafter the disputed Regulations) apply only to retired public functionaries and school teachers and staff who receive a monthly retirement pension approved under both the old and new pension system and public functionaries and school teachers and staff (hereafter public functionaries and educational personnel) who have not yet retired but who plan to receive a monthly pension, and they do not affect retired or serving public functionaries and educational personal who are covered only by the old or the new (not both) pension systems or who take one single lump-sum pension.
      
    •        In principle, that a new regulation may not be used before the law has come into effect to terminate a state of affairs or a legal relationship is what is meant by the principle of the prohibition of retroactive law. If the legal relationship encompassed by the new regulation crosses over the period of applicability of both old and new laws such that the constituent fact occurs begins to fully take effect only after the new law has come into force, then unless the law rules otherwise, the regulations of the new law should be applied. (see Judicial Yuan Interpretation No. 620). In this situation, application of the new regulation to what has already taken place in the period of applicability of the old, and a fact or legal relationship which continues to exist after the new regulation has come into force, is not a retroactive application of a new law. So, even if the object’s interest accorded by a preexisting legal status or his/her interest that could be expected under the regulations suffer loss, this does not touch on the principle of prohibition of retroactive law. The disputed provisions are only applicable, after coming into force, to the state and to retired public functionaries and educational personnel, in an ongoing legal relationship between public functionaries and educational personnel currently at work, and are not retroactively applicable to realities or legal relationships that have already ended. Furthermore when retired public functionaries and educational personnel according to the disputed Operational Guidelines carry out their preferential deposit, they do so in the form of periodic contracts. As for that part covered by a signed contract that has not yet reached its full term, it is not the case that the disputed Operational Guidelines are uniformly applicable. Taken in the sense explained above, the application of the disputed Operational Guidelines does not touch on the principle of prohibition of retroactive law.
      
    •        Disputed Operational Guidelines One and Two (hereafter the disputed Operational Guidelines) do not set out any limit to their period of applicability. Much time has passed since their application up to their amendment in 2006. Objectively the objects encompassed by their operation could expect they would continue to be applicable. Public functionaries and educational personnel inevitably took the preferential deposit as grounds for considering whether or not to continue to serve. Moreover, after their retirement most public functionaries and educational personnel were no longer able a salary each month that was comparable to what they received when working. Hence, on the basis of the disputed Operational Guidelines, most public functionaries and educational personnel who met the criteria for preferential deposits at the time of their retirement took the preferential interest rate as an important factor in undertaking financial planning after retirement or in considering whether or not to take voluntary retirement. Especially, before making a decision to choose to collect their pension as a single lump-sum or to receive it in monthly installments, most retired educational personnel will also inevitably calculate the difference based on their preferential deposits. As a result, retired School Teachers and Staff who are able to enjoy the application of preferential deposits regulated by the disputed Operational Guidelines should be objectively recognized as a concrete manifestation of their trust, rather than merely the desire alone, whose reliance interest worthy of protection in the constitution.
      
    •        Thirty years have gone by since the enactment of the disputed Operational Guidelines in 1974 and their amendment in 2006, many items of the state’s economic development and personnel system have undergone major changes. Emoluments and pensions for public functionaries and educational personnel have all been greatly increased. The economic environment and market interest rates have experienced great changes during this time, such that there is a huge difference between the current situation and that when the preferential deposit system was devised. Additionally, the implementation of the new pension system led to an unreasonable increase in the pension provided by the preferential interest on deposits from public insurance and pensions for some public functionaries and educational personnel. The disputed guidelines are to deal with this unreasonable situation, to prevent an excessive sum from the preferential deposit interest imposing a very serious burden on the state’s financial government and to thus ensure that the budget of other executive measures (such as various kinds of social welfare expenditure) is not laid to one side, and prevent an imbalance in relationships of interest between generations and other such problems (cf. the explanation appended to Letter “Ministry-Retirement Tzu 2 No. 1003303171” of the Ministry of Civil Service of January 7, 2011 and Letter “Tai Ren Tzu 3 No. 0990136535” of the Ministry of Education on September 1, 2000). Furthermore, the disputed Operational Guidelines also served the important purpose of looking after the sustainable operation of the state’s financial resources. Therefore, the enactment of the disputed Operational Guidelines did indeed take public welfare into consideration. Also, the disputed Operational Guidelines did not suddenly cancel preferential deposits. The nature of the preferential deposit system is that of a strategic compensatory measure to deal with times when the retirement pensions of civil servants has fallen low. It is not an independent grant outside the regular retirement pension payments. Rather it was amended so as to become the replacement rate that must be present in any normal pension system, one able to cope with changes in the differences of ability of persons with high or low posts. Also there was consultation of the replacement rate of pensions set out by the International Labor Organization, setting out an upper percentage limit, so as to remove or at least diminish some of the unreasonableness, and avoid the consequence of rejection of the budget. Taking into consideration the public interest which the disputed Operational Guidelines attempt to achieve the benefit of protection of reliability that retired or active public functionaries and educational personnel should enjoy, the measures taken by the disputed Operational Guidelines have not yet infringed the level of necessary reasonability. Therefore, they do not violate the principle of legitimate expectation nor the principle of proportionality.
      
    •        The aim of the retirement system of public functionaries is to protect the dignity and the living conditions of retired public functionaries and educational personnel so that they can be free of worry while at work and devote all their strength to their public task. When the preferential deposits to retired public functionaries are reviewed by the related agencies, in addition to complying with the intention of this Interpretation, they should avoid allowing the retirement income to fall to such an extent that it affects the dignity of life. In reviewing what is a reasonable retirement income, consideration should be given to retired school teachers and staff who have suffered serious hardship or retired from lower level positions by adopting a more favorable formula of calculation to mitigate the impact of changes to their life in retirement and financial planning. 
      
    •        One applicant presented letter No. 096338369 issued by the Taipei City Government Department of Education on June 6, 2007 for judicial interpretation. After consulting the Taipei City Government Department of Education, it has been determined that the said letter is the decision of a specific case of administrative punishment, and is not a regulation that could have a wider, more general effect. Therefore, according to Article 5 Paragraph 1 Subparagraph 3 and Paragraph 3 of the Constitutional Interpretation Procedure Act, this part of the applicant’s claim is not accepted by the Grand Justices, as is hereby indicated.
      
    • ______________________
      
    • * Translated by Lawrence L LEE.
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