The dilemma of China pension system
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E-mail CNTV, March 14, 2013
For China's elderly, limited resources is not the only conern they have. Despite the fact that more elderly have been covered by the country's pension system, many doubt whether the pension fund enough to support themselves?
The message is loud and clear.
China's top labor authority announces more than 400 million people were covered by China's pension system last year.
Yin Weimin, Minister of HR & Social Security, said, "I can assure you responsibly that there is no shortfall in the pension fund for enterprise retirees. The accumulated balance exceeded 2.3 trillion yuan last year."
The message comes after Premier Wen Jiabao vowed to raise such funding by 10 percent this year.
Government statistics show that the national pension fund had 1.9 trillion yuan in its account by the end of last year. Payments amounted to 1.5 trillion yuan, leaving a balance of 400 billion yuan.
Still, the pension system is far from perfect.
An expert from the Social Security Research Center warns of long-term risks.
Lu Quan, Assistant Professor of Social Security Research Center, Renmin Univ., said, "Currently we have no shortfall in the pension system and the balance looks good. But in the long run if we keep running under the current system, there will be a risk of shortfall."
China has a two-track pension system.
The public sector--the government and public institutions -- and the rest, including those working for companies and who live in rural areas.
Dissatisfaction and inequality are getting worse since the Chinese population is ageing so quickly. Reform of the pension policy is an urgent issue.
However, Professor Lu says transforming the two-tracks into one isn't the answer.
"Eliminate the two-track system won't solve the AGEING problem. For the long term sustainable social development, I think we need solve regional differences, for example, it's more common to see a surplus in Guangdong province since there are more younger fund payers, but the balance cannot be transferred to areas which suffer from a fund deficit. And I think we should make more efforts to let migrant workers enroll in the system." Said Lu Quan.
Lu also says that caring for a country's elderly population is more a problem of wealth distribution than insurance. He says formulating a balanced distribution system and implementing the reforms step-by-step would be more effective.
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