Taiwan will not have a new national pension system in place by 1 January next year as planned, said Premier Tang Fei yesterday (Sunday).

Speaking after a two-day conference on national financial policy issues over the weekend, the premier revealed the government was still trying to determine a suitable model for the proposed retirement scheme. The major sticking point among officials is over how the pension benefits will be funded.

Called National Annuity Plan, the new national pension scheme is a part of the "3-3-3" social welfare policy promised by President Chen Shui-bian before his election victory in March. Under the 3-3-3 plan, citizens over the age of 65 will be eligible for a pension of NT$3000 monthly, children under the age of three will receive free medical care and first-time home buyers can obtain low interest rate loans from the government at three per cent. Chen said the pension scheme was the first to be implemented.

During the two-day conference, government officials were faced with two models for the new pension system. One would raise its fund mainly through sales tax, sales of government assets and levy on lotteries, the other through workers' contributions. But Tang said after the meeting yesterday that the government's current "priority" was not to raise tax, triggering speculation from minor parties that the government is planning to make workers contribute. According to figures obtained from the Council of Economic Planning and Development, both models will cost the government NT$42 billion in the first year.

It is understood that a more detailed report on the two plans will be tabled before the Caucus before 15 September. The government will then decide which model to adopt.