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[TAIPEI] Public school teachers in Taiwan will see annual interest payments on their pension pots slashed to zero from 2021 under reforms passed by lawmakers on Thursday that are designed to keep the island's pension system solvent.
Teachers currently earn interest of 18 per cent on their pensions. That will be cut to 9 per cent from July 2018 and to zero three years later, the government said in a statement after the parliamentary vote.
A similar bill reforming pensions for civil servants was passed earlier this week, fulfilling a campaign promise by President Tsai Ing-Wen.
The reforms are projected by her government to delay the possibility of a default in payments to retirees by a decade. Additional legislation reforming the pension system for the military will be reviewed later.
The plan has angered public sector employees, many of whom say it will ruin their retirement plans. Thousands of military personnel, teachers, police and civil servants have protested against it.
Pension reform is critical for Taiwan as large payouts are no longer sustainable for the export-reliant economy, with contributions crimped by slower economic growth and a rapidly ageing population.
Pensions for civil servants could default by 2030, teachers by 2031, and other workers by 2048, government data shows, if the system is not reformed.
Thursday's bill also raised the minimum retirement age for teachers to 58 from 55, the statement said.