Some experts have thrown their support behind the decision to break the dual pension system. "In the short term, the reform will hurt some people, but in the long term, the reform will benefit all," said Cheng Jie, an associate researcher with the Institute of Population and Labor Economics of the CASS. "By incorporating 37 million people into a large pool of hundreds of million people and relying on the resources of the whole society, the country will have a much stronger capability of sharing risks. Cheng also thinks the same as the cost of reforming state-owned enterprises, the financial gap for pension reform should also be mainly covered by government fiscal revenue.

Su Hainan, Vice President of the China Association for Labor Studies, thinks that since the reform will be carried out nationwide simultaneously, the Central Government will not make local governments to assume all the costs of pension reform. "If all costs were assumed by local governments, it would be highly likely that the reform wouldn't succeed in some areas," Su said.

Zheng Bingwen, Director of the Center for International Social Security Studies of the CASS, said the pension reform this time will be carried out nationwide, and the transfer payment by the Central Government will cover the reform cost.

Regional gaps

In his report, Ma said China will promote the establishment of a national uniform pension program for urban employees based on the improvement of uniform management at provincial levels. Endowment insurance for non-employed urban and rural residents will be managed by provincial governments.

According to figures from the Financial and Economic Affairs Committee of the 12th National People's Congress, currently, among the 31 provinces, autonomous regions and municipalities, only six have established uniform pension programs for urban employees—Beijing, Tianjin, Shanghai, Tibet, Qinghai and Shaanxi.

Ma's report said that because of differentiated financial affordability and different balances in the pension fund pools, pension standards differ remarkably among regions.

According to Nie's estimation, in 2012, south China's Guangdong Province had the highest pension fund balance, standing at 387.96 billion yuan ($63.39 billion), while Tibet had the lowest, which was only 2.46 billion yuan ($401.96 million). In the same year, the average pension in Guangdong was 1,924 yuan ($314.38), and nine working people supported one retiree, while in northeast China's Heilongjiang Province, the average pension was 1,488 yuan ($243.14), and only one and a half working people supported a retiree, imposing a heavy burden on the working employees.

"To establish a national uniform program, provinces and municipalities that have high balances of pension funds will have to fill in the gaps for those with low balances, and well-developed provinces will certainly not be willing to do this," said Nie. "It will be very difficult to establish a unified national program."

"Every problem involved will be difficult," said Yang Yansui, Director of the Employment and Social Security Research Center of Tsinghua University, adding that the Third Plenary Session of the 18th CPC Central Committee has made clear requirements for the pension insurance system: placing basic pension under unified national planning, pushing forward the reform of pension insurance system for government bodies and public institutions, and progressively raising the retirement age.

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