Taiwan passes controversial Bill cutting veterans' pensions

Taiwanese President Tsai Ing-wen has said pension reform is her most important task, with official reports warning that an unreformed pension system could be bankrupt by 2020. PHOTO: REUTERS

TAIPEI (AFP) - Taiwan's military veterans will see their pensions cut as soon as next month after parliament passed a controversial Bill that had sparked violent demonstrations.

Wednesday's (June 20) vote marks a victory for President Tsai Ing-wen, whose attempts to make sweeping pension cutbacks since she came to power two years ago have faced intense opposition.

Senior veterans will see their monthly stipend cut by more than 20 per cent over the next decade, after a smaller initial drop, according to official estimates.

The government says veterans of lower ranks will see less severe cuts to their pensions.

Tsai has said pension reform is her most important task, with official reports warning that an unreformed pension system could be bankrupt by 2020.

But thousands of veterans and other civil servants have regularly gathered outside parliament to protest the cuts.

Dozens of police officers and reporters were injured in a clash in April when protesters threw smoke bombs and used chains to try to pull down a gate and storm parliament.

Tsai said her government has completed the critical reform that "every leader had wanted to do", but did not.

"We now have a Taiwan with a sound and well-structured system where every young civil servant, teacher, and military personnel can be sure of their pensions," she told reporters on Thursday.

She said the reduced expenditures will be injected back into the pension funds to make them more sustainable.

Tsai admitted some retirement plans will be affected, apologising and thanking veterans for their sacrifice.

"It is hard for third parties to understand that feeling of discontent and helplessness for most of those who will have less money in their pockets," she said.

But she said the majority can understand the country's predicament "even though there has been a lot of emotions and dissatisfaction in the course of reform".

A former lieutenant-colonel will initially see their monthly stipend cut from Tw$70,797 (S$3,195) to Tw$69,353, and eventually to Tw$56,360 after ten years, according to government estimates.

The majority of public sector retirees are supporters of the opposition Kuomintang (KMT) which relinquished its majority in Taiwan's parliament for the first time in 2016 after losing elections to Tsai's Democratic Progressive Party (DPP).

Legislators passed a separate pension reform Bill last June that targeted civil servants. The government hopes both Bills will come into effect on July 1.

In the past, the government offered generous incentives to public sector employees to compensate for low starting salaries.

As Taiwan's economy has slowed down in recent decades government jobs have become increasingly attractive, placing additional burdens on state finances.

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