Gov't set to tackle pension fund woes

(China Daily)
Updated: 2006-11-28 07:48

The government is studying the feasibility of raising the mandatory retirement age to plug the huge deficit in the pension fund, the China Economic Weekly reports.

The social security fund was 800 billion yuan (US$102 billion) in the red at the end of last year, compared to 36 billion yuan (US$4.6 billion) in 2000, the Chinese-language magazine said, citing a Ministry of Labour and Social Security document.

Special coverage:
Social security fund in spotlight
Related readings:
'Time ripe for welfare reform'
Fund warned of risks in investment
Pension fund to be invested in railways
Pension fund earns 60b yuan from banking investments
Scandal offers opportunity for action
 Shanghai issues social security guidelines
 Pension fund to get huge boost
The magazine quoted unidentified ministry officials as saying that they would put forward a proposal on raising the retirement age to the higher authorities within a month.

Guo Yue, a researcher with the All-China Federation of Trade Unions Research Centre, attributed the shortfall to the fact that many employees retire in their 40s or 50s, much earlier than the requisite age - 60 for men and 55 for women, or in some cases, 50.

Raising the legal retirement age will delay the payment of pension, according to experts.

Official statistics showed that in 2000, the average retirement age was 51.2.

Zhang Hongmei, a bank employee who retired at 45 in 2003, said she is happy with the 1,200 yuan (US$153) monthly pension. Before retirement, she was paid 1,400 yuan (US$178) a month. Zhang and many others contributed less to the pension fund than they would have if they had retired at the prescribed age; but enjoy full pension benefits. The policy allowing earlier retirement was implemented in the mid-1990s, when State-owned enterprises were reformed.

Early retirement can alleviate some unemployment pressure in the short term, but over time, it will negatively affect social security and economic development in an aging society, according to the magazine.

According to the United Nations, China meets all the criteria of an aging society ?the population over 65 has exceeded 100 million, accounting for 7.7 per cent of the total; and the population over 60 accounts for 10.5 per cent of the total.

Shanghai is already considering allowing senior technicians and engineers to continue working for five to 10 more years after they reach their retirement age, Shanghai Morning Post reported last week.

However, a central government official is reported to have told China Economic Weekly that raising the retirement age too fast would exacerbate the unemployment situation.

The ministry estimates that at least 24 million urban residents need jobs each year, but there are only 11 million openings. In addition, there are also 100 million surplus labourers in the rural areas. "We need to balance pension fund needs and unemployment," said the official.

Making matters worse is that about 7.1 billion yuan (US$905 million) of the 2-trillion-yuan (US$255 billion) social security fund has been misappropriated, according to the National Audit Office.

Lengthening the working lives of professional talents would benefit both individuals and the country, says a signed article in Youth Daily. An excerpt follows:

It is reported that the government is considering revising regulations on the retirement age.


Top China News  
Today's Top News  
Most Commented/Read Stories in 48 Hours