Text: | Print|

Aging China wants fairer, efficient social insurance

2013-12-01 17:59 Xinhua Web Editor: Yao Lan
1

Wang Hong, a 31-year-old woman and stay-at-home mother in South China's Haikou City, is worried about her future pension as she stopped paying social insurance four years ago.

After paying the insurance for five years while at work, Wang quit her hotel job to look after her child. With her child now 3 years old, Wang Hong, not her real name, is looking for a new job. But she is hesitant about paying the insurance she has missed for the past four years.

"I don't know what will happen to my money in a social insurance account with possible inflation and other risks. It feels safer to keep it in my own pocket," she said.

In China, 38 million people stopped paying social insurance this year, either before or after reaching the pension-receiving threshold of 15 years.

Laid-off workers, employees in cash-strapped small companies and migrant workers are the majority of those who have stopped paying the insurance halfway through, according to Cui Peng, a research fellow with People's Insurance Company of China.

Social insurance funds cover basic endowment for senior citizens, basic medicare, unemployment, work-related injury and maternity.

The spending of endowment insurance funds, a key part of social insurance, grew 22 percent in 2012 year on year, while its revenue increased by 19 percent, according to the Ministry of Finance last week. This poses challenges for future pension payments.

According to the Ministry of Human Resources and Social Security, at the end of 2012 about 210 million urban employees paid endowment insurance.

Endowment insurance is paid by staff and the company, 8 percent and 20 percent of his or her wage respectively.

The money from companies is used to meet current pension demands while personal payments are accumulated for his or her own future pension after retirement.

However, as China's population ages, personal payments are often used to supplement growing current pension demands.

According to a research report by Chinese Academy of Social Sciences, by the end of 2011, more than 2 trillion yuan in the personal pension account was transferred to pay retirees.

Since 2011, pilot trials in northern China's Liaoning, Heilongjiang and 11 other provinces have been set up to ensure the personal pension account is untapped. However, little progress has been made due to fiscal problems.

Debate over changing the retirement age, complaints over differentiated insurance policies for government and non-government employees and doubts about the amount in the pension pot have all influenced people to stop paying social insurance halfway through.

A post on a forum on SZnews.com claiming a personal monthly deposit of 500 yuan in a bank would pay better than paying social insurance went viral in early November. It caused public anxiety.

"After thirty years of monthly deposits of 500 yuan, one would receive about 3,400 yuan per month with interest. Why is it necessary to bother the country for our pension?" netizen Wangbufuzhao said in the post.

However, the picture is not that rosy, said Ye Tan, a commentator on economics, citing that inflation, economic cycle fluctuation and other risks may compromise a stable and reassuring post-retirement life.

"The pension system designed by government in theory can provide basic old age care, but current policies' lack of fairness and efficiency has dampened public confidence," Ye said.

"It is impossible to solely rely on the insurance payment of companies and staff to pay all pensions," said Tang Jun, Secretary of Social Policies Research Center with Chinese Academy of Social Sciences.

China has the largest senior population in the world, with 194 million people at or above the age of 60 at the end of last year, according to the China National Committee on Aging.

This age group is expected to grow to 243 million by 2020 and by 2050, one third of the population will be aged over 60.

With an aging society, fewer people are paying social insurance while more people are taking a pension. A government fiscal subsidy and a state-owned capital supplement should be in place to support pension payments, Tang said.

The recently concluded key Communist Party of China meeting proposed to lower the social insurance premium rate and transfer a certain amount of state capital to support social insurance funds.

"As is the case in developed countries, the public should pay a certain amount of income-based insurance and all receive a similar amount as a basic pension, while those who pay more can get more in supplement," Tang said. "The social insurance system should balance fairness and efficiency to motivate and reassure the public."

Comments (0)
Most popular in 24h
  Archived Content
Media partners:

Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.