-
Advertorial
-
FOCUS
-
Guide
-
Lifestyle
-
Tech and Vogue
-
TechandScience
-
CHTF Special
-
Nanshan
-
Futian Today
-
Hit Bravo
-
Special Report
-
Junior Journalist Program
-
World Economy
-
Opinion
-
Diversions
-
Hotels
-
Movies
-
People
-
Person of the week
-
Weekend
-
Photo Highlights
-
Currency Focus
-
Kaleidoscope
-
Tech and Science
-
News Picks
-
Yes Teens
-
Budding Writers
-
Fun
-
Campus
-
Glamour
-
News
-
Digital Paper
-
Food drink
-
Majors_Forum
-
Speak Shenzhen
-
Shopping
-
Business_Markets
-
Restaurants
-
Travel
-
Investment
-
Hotels
-
Yearend Review
-
World
-
Sports
-
Entertainment
-
QINGDAO TODAY
-
In depth
-
Leisure Highlights
-
Markets
-
Business
-
Culture
-
China
-
Shenzhen
-
Important news
在线翻译:
szdaily -> In depth -> 
China pension reforms tackle inequality
    2015-01-20  08:53    Shenzhen Daily

    China’s dual-track urban pension system — in which corporate employees must contribute 8 percent of their salary to the pension system, but government employees contribute nothing — has been a source of populist outrage for years. The State Council last week announced a long-awaited plan that will move to equalize the two tracks.

    DOCTORS, teachers and other public sector workers in China are worried. Some have even gone on strike, worried about what will happen to them when they retire. In some central and western Chinese regions, many civil servants reportedly have been applying for early retirement. A pension reform plan revealed last week by the State Council has led to many civil servants worrying about their pension payments.

    The new pension system is expected to come into action in October 2015.

    Under the old system, public sector workers did not have to pay into a pension fund — their pension was paid for by the State. Their pension payments were nearly 90 percent of their pre-retirement monthly salary.

    But under the new system, the size of pension payments will mainly be decided by how much retirees have paid into their pension fund, and for how long. This would bring public sector workers more in line with their private sector counterparts who must pay 28 percent of their monthly salary into a pension fund.

    Private employers must also pay 20 percent of their workers’ salaries into a pension fund. Usually, the pensions of private sector employees are equal to 40 to 60 percent of their final salary. This gap has led to discontent among private sector workers, who have called for the government to create a fairer system.

    Deficit reduction

    In making this announcement, China is taking on one of the most challenging areas of reform — the long-running dual pension system.

    China had nearly 7.2 million civil servants and more than 31.5 million public sector workers at the end of 2013, according to official figures. Of these workers, 2 million medical doctors and 17 million teachers make up the majority of public sector workers.

    Zhu Lijia, a professor at the Chinese Academy of Governance, told the Global Times that the new scheme will likely “start with setting a direction and moving things along gradually to weed out discrepancies in the pension system.”

    The goal is to develop a unified pension scheme that covers both public sector and private sector employees. Scholars have said that the plan represents “a major step” toward a more equitable and balanced system.

    According to a report on China’s pension fund development released by the CASS in late December, 19 provincial-level regions had pension deficits in 2013, with a total shortfall of 170.2 billion yuan (US$27.4 billion).

    China’s rapidly aging population has led to a decrease in the proportion of the country that is paying into pension funds but an increase in the number of people receiving pensions. It is also considered one of the major reasons for pension reform.

    Official figures show that the number of people above 60 years of age has exceeded 200 million, accounting for 14.9 percent of the total population.

    A fair new plan

    A national debate has been haunting pension system reform for years.

    Private sector workers pay 28 percent of the base salaries into pension funds, 8 percent by themselves and 20 percent by their employers, yet they receive less than they paid into the system after retirement because they have to share the pension fund with public sector retirees who made little or no contributions to the fund.

    Under the new reform plan, public sector workers would have to make the same 28 percent payment into the pension fund.

    Hong Kong-based newspaper Wen Wei Po reported on Sunday that the country plans to increase the salaries of civil servants nationwide by to up 60 percent, but it is unclear whether or not other public sector employees will be getting pay increases to offset the costs of paying into the new pension schemes.

    The reform means the national pension system will become a multi-channel financing and funding system, where employers, individuals and the government take joint responsibility, said Zheng Bingwen, a social security researcher with the CASS.

    Tang Jun, a sociology professor at the CASS, told the Global Times that the pension reform process which started in the 1990s — when the government began to pay for the pensions of State-owned enterprise (SOE) employees — generated huge “reform costs,” and it has taken a long time to digest these costs.

    Tang argues that one way to cover the “reform costs” in this case would be for SOE dividends to be used to pay for public pension funds.

    The Chinese government has extensively expanded the number of people covered by public pension schemes — now totaling 830 million individuals. The average pension payment for an urban worker is 2,070 yuan per month, according to the Xinhua News Agency.

    Still, lots of citizens lack social security when they retire. It is estimated that only 20 to 30 percent of private enterprise employees are covered by a pension sufficient to pay their living costs during retirement. Many migrant workers are not covered by any pension scheme.

    In 2009, China started to provide pensions to farmers over 60 years old. The payment amounts, which differ based on different local economic situations, range from 50 yuan to 220 yuan per month.

    Assessment methods

    Su Hainan, vice director of the China Association for Labor Studies, thinks that pensions reform cannot just be regarded as a simple reform of funding methods. It will also call for changes in how employees do their jobs, since it will form a parallel system of performance evaluation.

    The pensions will be based both on the positions of officials and also on the performances of common employees. It will mean that those who are not officials can also obtain higher pension payments according to the quality of their work, as well as their final salaries, Su explained.

    Many people have welcomed these reforms, especially young workers, as the new pension scheme allows pension funds to be mobile and moveable. The pension account can follow the holder between different jobs and pension balances will be transferable.

    “It will provide us more freedom to choose jobs. Under the old system, we were stuck with our old work units because our pension was there. The new rules will provide us with freedom to change jobs because our pension under new system will go with us,” a human resources manager with a State-owned company in Beijing told the Global Times on the condition of anonymity.

    “Also, the new system will set up a professional system to evaluate employee’s salary levels, so an employee can be paid in accordance with their professional capability, not just on their position. It is very reasonable,” she said.

    (SD-Agencies)

深圳报业集团版权所有, 未经授权禁止复制; Copyright 2010, All Rights Reserved.
Shenzhen Daily E-mail:szdaily@szszd.com.cn