The Ministry states today the 15^th that after yesterday’s announcement of the “New military personnel pension system” (draft) points, some veterans have been panic-stricken by media reports of the system immediately reducing the 18% retirement savings privilege to zero, and questioned why their treatment is harsher than civil servants and teachers. The Ministry clarifies that after the new system comes into effect the 18% savings privilege will be reduced evenly within a 10-year span to alleviate the impact of the effect on veterans’ lives. There has been a massive misunderstanding about the harshness of the new system.

The Ministry shall point out that current and retired experienced personnel receiving monthly pensions will still enjoy basic pensions; however if the original pension which includes the 18% privilege is higher than that stated in the new act, the difference shall be reduced evenly within a 10-year span. This is to alleviate the impact of the reforms which is intertwined with the “New military pension system” to ensure current personnel and veterans are well looked after.

For example if a colonel has a total of 28 years experience (Level 12) he is receiving a pension of $87,165/month before the reduction comes into effect. After the new system fully comes into effect he will receive a pension of $71,512/month, so on average an annual reduction of $1565/month [(87165-71512)/10 years]. The first year of the new system the colonel will receive a pension of $85,600/month, and will receive a reduced $71,512/month in the tenth year. The impact on veterans’ has been real lessened.

Regarding those deactivated personnel who have received one discharge payment, if the one-time discharge payment and military insurance payout is less than or equal to the lowest guaranteed amount the basic pension is calculated at 18% annual interest. If exceeding the lowest guaranteed amount the interest rate drops to 12% from July 1, 2018 through December 31, 2020, and then a further 2% every two years. Drops to 6% at January 1, 2025 which is the same as civil servants and teachers.

The Department stresses that to continually ensure the system is intact and ensure the rights of personnel, within one month of the points of the draft of the “New Military personnel system” act being published, the Ministry and Veterans Affairs Committee will listen to opinions from current and retired personnel and set up a special window to allow for consulting with personnel. Veterans who are not yet familiar with the new system or any personnel who wishes to know more about his/her rights are welcome to the window.