It is imperative to realize the free flow of individual pension accounts within the country, says a commentary in Beijing News. An excerpt follows:

The second draft of the labour contract law submitted to the Standing Committee of the National People's Congress for review rules that the government shall take measures to realize a free flow of individual pension accounts for the country's workers.

Such a flexible pension account system is necessary for the free flow and allocation of labour resources. It will help increase the utilization efficiency of human resources and ease the worries of workers. Though it is only a principle and a goal on paper, people expect a great deal from it.

It will be a complicated project to build a pension system that allows the free flow of individual accounts in the country. There are still many obstacles.

First, there are great differences in wage levels between industries and regions. The huge imbalance and disparity should be narrowed step by step.

Second, there are institutional obstacles. The current pension insurance system is based on regional management. With the lack of unified management, it is hard for accounts to be transferred across sectors or regions.

It is important to break regional and departmental protectionism. If the individual pension accounts of labourers, especially those young workers, were to flow freely, it would affect regional and departmental interests in the short term. Thus certain regions, especially developed ones with a higher accumulation of pensions, may tend to block the flow of such funds. Therefore, it should be clear that the rights and interests of workers related to the basic pension system should be protected.

(China Daily 12/28/2006 page4)