Instead, the loan repayments will be collected in the future by deducting portions from the borrowers' stipends they are entitled to after retirement, or from payments to their beneficiaries.

The government's compulsory labor insurance program launched a loan scheme in 2003, and since then, over 450,000 workers have taken out relief from the funds. Of these borrowers, about 100,000 have been in serious financial difficulties and have been unable to repay their loans.

The existing law requires the insurance program to pursue the defaulting borrowers, which would create serious social problems, explained KMT Legislator Hsu Shao-ping. Their assets could be seized because of the failure to repay the loans, Hsu said.

The revised law, which passed the third reading and is expected to be promulgated soon, addresses the issue, releasing the financial pressure on these borrowers, she added.

All workers in Taiwan are covered by the labor insurance program.