Unified Pension Scheme Under Scrutiny
   2014-03-13 15:26:17    CRIENGLISH.com      Web Editor: Liu Yuanhui

Chinese premier Li Keqiang has stated in his 2014 government work report that the country's old-age pension system is one of the "many problems which people are not happy about". At the ongoing annual session of the National People's Congress, many deputies are discussing how to establish a national unified pension scheme.

Liu Kun has more.

48-year-old Cui Wuying has just arrived at Beijing West Railway Station, coming from his home in a small village in central China's Henan province to work at a construction site in Beijing.

He says he wants to work and save money while he still has strength and energy because the 60 yuan of monthly pension he receives from the government after he gets 60 years old won't be enough.

"Of course that won't be enough. My neighbor in the village introduced the job in Beijing to me. I will be working on a construction site. He works there, too. You know the only thing we farmers have that can be traded for money is hard labor."

Arriving at almost the same time as Cui Wuying are this year's deputies to the annual session of the 12th National People's Congress, or NPC, China's top legislature. Many deputies have brought with them motions or proposals for increasing the pension level in rural parts of the country, hoping to make life better for villagers like Cui Wuying.

Mao Fengmei, head of Dalishu village in northeastern China's Liaoning province and an NPC deputy, has brought a detailed suggestion on raising pensions for the rural population.

"I advocate a progressive rural pension scheme. The government should give 300 yuan a month to those above 80 years old, 200 to those aged between 70 and 80, and 100 to those between 60 and 70."

Shen Jinjin, a deputy from east China's Jiangsu province comes with a similar proposal, but he only urges a universal raise for anyone above 60 to a monthly 100 yuan. She states the more important thing is to set up a steady pension growth mechanism.

"It's unrealistic to improve the standards to a very high level in a very short period of time. So I think we should build a growth mechanism in which we can raise the rural pension level gradually. As the economy develops and inflation accelerates, we can raise the level once every two or three years steadily."

Currently, there are five different types of pension system in China: pensions for government officials, public institution staff, urban company workers, urban jobless and for rural villagers. The pension level lowers successively from government officials to rural villagers and results in a huge gap between the two.

The pension scheme for rural villagers has only been in operation since 2009. Villagers in different provinces of the country may receive varied amounts of money, depending on the extent of their own payment and subsidy from the local government. But on the national scale, the central government has promised 55 yuan a month for anyone aged above 60 years old who has joined the scheme.

At this year's annual session of the NPC, Chinese Premier Li Keqiang has vowed to build a unified pension system for its rural and urban population.

"We will establish a unified basic old-age insurance system for rural and non-working urban residents and improve the way it is linked with the old-age insurance system for working people. We will reform the old-age insurance system for government bodies and public institutions and encourage the development of enterprise annuities, occupational annuities and commercial insurance."

Presently on the agenda of pension reform is the unification of pensions for rural villagers and urban jobless, a movement that's been going on in various parts of the country.

According to statistics by China's Ministry of Human Resources and Social Security, by the end of 2013, the pensions for rural villagers and urban jobless reached about 498 million people in the country.

However, the unification only included a small part of China's entire urban population. A little bit more than 30 million out of the 498 million unified pension account holders are from the urban jobless group.

And the Ministry's figures show that about 300 million urban residents are participating in urban company workers' pension scheme.

Zhang Zhanxin, a researcher of population and labor economics at the Chinese Academy of Social Sciences, says such unification only represents a very small step towards building the unified basic old-age insurance system Premier Li Keqiang described.

"The proportion of residents in cities who have registered for urban jobless pensions is rather small. It's not that the unification is meaningless, but it's a very small step. The real unification will come when the government integrates the urban company workers' pension with that of the rural villagers, because the majority of the urban population is joining urban company workers' pension."

Zhang Yi, an expert on social insurance studies with Shanghai University of Finance and Economics, says that, in the process of integrating rural villagers and the urban jobless, China needs to learn from the lessons of the Japanese government.

"A lot of people are saying that the pension levels for urban jobless and rural villagers are too low and want to improve them. In the 1970s, Japan saw a rapid economic development and the Japanese wanted to build a welfare society. Japanese people were happy to find out that their pension level almost doubled over one night. But 20 years later, problems began to reveal themselves. Drastic pension increase actually has partly contributed to Japan's economy recession in later years. The Chinese government needs to be reminded of this."

Zhang Yi further points out that the bigger obstacle facing pension unification lies in the integration of urban company workers' pension with that of government officials and public institution staff.

Pan Jianhua is mayor of Rudong County in eastern China's Jiangsu province and deputy to this year's NPC session. The county has been pioneering the nation in terms of pension scheme reform.
Pan says the overall direction of the reform is raising the pension level for everyone and narrowing the gap between rural and urban areas. However, he is concerned that the process is going to take a long time as it is being complicated by many other issues such as economic momentum, employment rate and an aging society.

"A good pension system needs the support of a strong economy. And only with a full employment rate will residents be able to contribute to the pension system. And our country is now faced with an aging society, so the population benefiting from the pension is increasing. Without new jobs created, the population paying for the pension will decrease so we won't be able to have enough money for the pension system."

32-year-old Cui Hang has come to Beijing with Cui Wuying together for migrant jobs. The two are from the same village in Henan. Cui Hang says he doesn't mind paying a little bit more for his old-age insurance as long as the government pledges to give back more.

"I want to pay more and receive more when I get old. Some farmers have savings and are able to pay more."

Cui Hang also says he hopes one day he will be able to enjoy the same pension level as government officials.

For CRI, this is Liu Kun.


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