e-magazine
Charting the Course
China reviews the year gone by and sets new goals accordingly
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Sci-Tech
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Top Story
Top Story
UPDATED: January 3, 2015 NO. 1 JANUARY 2, 2014
Caring for the Elderly
China faces an urgent need to reform its pension system and improve eldercare to deal with a rapidly aging population
By Tang Yuankai
Share

GOVERNMENT-SUPPORTED CARE: Community workers in Hefei, Anhui Province, explain to 98-year-old Wang Jinfu (left) on November 21 how he can use government-issued coupons for senior citizens to purchase the goods that he needs (DU YU)

Professor Zheng Gongcheng with the School of Labor and Human Resources of the Renmin University of China in Beijing explained that delaying the retirement age is not targeted at offsetting pension funds' deficits. Instead, this change is tailored to suit the profound social changes that have occurred, such as life expectancy increases, increase in the time spent being educated, the changes in population age distribution, and labor supply and demand balances.

Top-level design

China's pension funds consist of two parts: the social pooling account funded by employers' contributions and the personal saving accounts funded by individual employees' deposits.

The most pressing problem facing China's current pension insurance system is the segmentation of pension programs by localities and social groups, which results in two types of urban pensions. Government workers, totaling 10 million, and employees of government-affiliated public service institutions, totaling more than 30 million, do not make personal contributions to any pension programs; in the meantime they receive more generous retirement benefits than other people in the workforce, including retirees from urban enterprises, who must make compulsory contributions to pension funds.

As revealed by the China Pension Report 2012, the pensions of retirees from urban enterprises accounted for around 30 percent of their previous monthly salary while the proportion for retirees from government agencies and public service institutions was between 80 percent and 90 percent.

"The existence of 'two types of urban pensions' is mainly due to the fact that pension reforms on these two groups of people did not begin at the same time," Zheng said.

China launched the pension system for workers of urban enterprises in 1986. A rural pension insurance program was initiated in 2009, followed by a pension program for non-employed urban residents in 2011. However, participants of the latter two programs only enjoy low-level benefits.

Zheng said that the only solution to eliminating the unfairness caused by the "two-track" system is to establish a pension plan for employees of government and public service institutions that resembles that of enterprise employees. "Those working for government organizations and public service institutions should contribute to the same fund as their salaries all come from public money," he added.

Pilot programs allowing existing pension funds to absorb employees from government organizations and public institutions were launched in five provinces and municipalities as early as 2008. However, these pilot programs were failures.

The less than satisfactory results of these trial reforms show great resistance to revoking the "two-track" system. Experts said that while any delay in reforms would increase the public's frustration and make the prospect of reform bleaker, diminishing the retirement benefits of government and public service institution workers has been met with enormous resistance.

As reported by People's Daily in August 2013, the MOHRSS stated it would not force employees of government agencies and public service institutions to join the existing pension funds for enterprise employees. Instead, similar pension programs will be established for the former to eventually abolish the "two-track" pension system.

Zheng Bingwen, a senior research fellow of social security policies with the CASS, said that most people who oppose raising the retirement age are also unsatisfied with the "two-track" pension system and the unfairness it represents. He said that the "two-track" system has become a barrier in many ongoing reforms. "Without the abolishment of the 'two-track' system, China's social security reform will not be able to move forward," Zheng Bingwen said.

Furthermore, segmentation of pension programs in China presents barriers to the spatial and social mobility of labor, leading to an inefficient labor market and "shallow" urbanization.

Professor Zheng Gongcheng with the Renmin University of China said that the long length of time the "two-track" system has already been used is the largest source of unfairness in the current pension system.

"Rescinding it should become one of the top priorities in top-level design of China's pension insurance system reforms," Zheng Gongcheng said. He added that the reform's most important tasks include reforming pension systems for government and public service institution employees, improving social pooling and national pooling, and increasing the support given to the elderly in rural areas. "The most urgent tasks are the first two," he noted.

Zheng Gongcheng believes that any top-level design requires new guidelines, the removal of structural handicaps, guarantees of the new system's fairness and equity, and the unity of the pension system.

"Reform of social programs and innovations in social management will become important areas for releasing reform dividends. Reforms on pension arrangements will ensure that the entire social security system becomes fairer, more sustainable and mature," Zheng Gongcheng said.

   Previous   1   2   3   Next  



 
Top Story
-Empowerment Through Infrastructure
-Special Reports: APEC China 2014
-Protection at Home
-A Weaker Union
-Will the 'China Miracle' Continue?
Related Stories
-The Pension Conundrum
-Help at Home
-Reverse Mortgages
-How to Reform Income Distribution?
 
Most Popular
在线翻译
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved