The central government unveiled its long-awaited plans for pension reform on Jan 14 for the country’s 40 million government and public institution staff members in a move to further ensure social equality and cope with its aging population.
The new pension system, made public on the State Council’s website, stipulates that members of government and public institutions must pay for their pensions together with their employers.
The reform is aimed at establishing a more fair and sustainable pension system, the notice said, and comes after more than two decades of a dual pension system under which government and public institution employees did not need to pay for their retirement plans.
In 2013, the average monthly pension for corporate retirees was about 1,900 yuan ($307). Pensions for retirees from public institutions were 1.8 times that, while government retirees received 2.1 times, Xinhua News Agency reported.
The central government has increased the pension of corporate retirees 10 times since 2005 to ensure their livelihoods.
Lu said the reform will ensure the fairness of the country’s pension system.
Vice-Premier Ma Kai said during a report to the bimonthly session of the National People’s Congress Standing Committee last month that the pension reform will be carried out with reforms to the salary system of civil servants and staff of public institutions.
Ma said that the high percentage of wages going to social security funds－as much as 40 to 50 percent－has been a major burden to Chinese enterprises, Beijing News reported.
The country’s quickly aging population could pose another challenge to the social security funds, Ma said.
In 2013, 14.9 percent of the country’s population was aged 60 or above. That could increase to 19.3 percent by 2020 and 34.2 percent by 2050, he said.
“The population is aging before the country gets rich. We need to plan early. The later we plan, the higher the price will be,” Ma said.