Want China Times, Xinhua 2015-01-19
China's plan to unify its two-tiered pension system is expected to improve social equality by eliminating a major disparity between public and private employee benefits.
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| Retired school teachers in Nanjing. (File photo/CNS) |
China's plan to unify its two-tiered pension system is expected to improve social equality by eliminating a major disparity between public and private employee benefits.
According
to the reform measures announced last week by the State Council, the segregated
system will be unified, with public institution staff brought under the same
pension rules as private sector employees.
Pension
reform has been an ongoing process in the world's most populous country over
the past two decades, the result of which has been a system that requires both
employers and employees to contribute to pension funds, which are distributed
to employees after retirement.
The pension
benefit amount is based on how much both employers and employees have
contributed to the pension account.
The
majority of Chinese workers must pay 8% of their salaries each month toward
their pension benefits, while employers are required to contribute an additional
20% of an employee's salary toward pensions.
However,
pension reform has stalled at public institutions, which have an estimated
workforce of 40 million, including civil servants, teachers, doctors, and
science researchers. These public employees have inherited a six-decade-old
pension system that does not require staff contributions, even though they
enjoy bigger pension payments, which are entirely state-funded.
The
two-tiered system has led to public complaints about inequality, with many
arguing it is unfair for public employees to enjoy better pensions than private
sector staff, even though they do not pay a dime during their working years.
An ongoing
survey on the "dual pension system" conducted by Xinhua News Agency
on its website shows that pension disparities and inequality were the top
concerns among respondents, followed by the system's potential impediments to
switching jobs, and its growing burden on government spending.
"The
reforms will be conducive to building a social pension system that is fairer
and more sustainable," Chinese vice premier Ma Kai said.
Ma said the
unified system will also boost other reforms at public institutions, such as
human resources management. Under the segregated pension system, public
institution staff with guaranteed state-paid pensions have been reluctant to
switch to jobs "outside the system" for fear of forfeiting benefits.
Analysts
said that the new reform measures will make it easier for workers to switch
between public and private employers.
"The
reform measures will change the old stereotype that public institution staff
are of a noble class compared to other workers. They are weakening the
traditional view that a job inside the state-backed pension system means life
stability," said Su Hainan, vice president of the China Association for
Labor Studies.
"By
bringing different groups of people under the same social benefit framework,
the reforms reflect China's efforts to promote fairness and justice," said
Wang Yukai, a professor at the Chinese Academy of Governance.
Wang said
that pension system reform has long faced many obstacles, but the latest
measures will boost expectations for future reforms.
Given
possible opposition from public institution staff, the government pledged that
current public employees will be able to retain their state-funded benefits
earned prior to the reform, according to the State Council.
Meanwhile,
a "career bonus scheme" will be established for staff as a
supplementary measure to ensure that their pension benefits will not be
severely downgraded following the reforms, according to the State Council.
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