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China has kicked off reform of its corporate old-age pension system to extend coverage and ensure sustainable development, in an effort to cope with a graying population and maintain social stability.
The reform measures, expounded by senior officials of the Ministry of Labor and Social Security at a press conference in Beijing Thursday, is set to extend coverage of the system to workers of various sorts of urban businesses, self-employed people and people of no fixed jobs.
"Large numbers of urban self-employed people and people of no fixed jobs have not participated in the system," said Liu Yongfu, vice-minister of Labor and Social Security.
According to Liu, this group of people enjoy preferential policies or even subsidies as they join the system.
The reform also aims to rationalize the operational mechanism of the system to enhance its appeal and boost the pool of funds.
Under the existing system, a person will get a certain amount of benefit after he has contributed to his account for 15 years. Even if he works longer than 15 years and invested more in the account, the benefit will not vary.
"Such a practice is unfair in the first place," said Liu. "In addition, it fails to conform with the situation of retired workers."
According to Liu, Chinese workers live another 25 years after their retirement on the average. Under the existing system, however, they can draw money from their accounts for only 10 years before the accounts are exhausted.
Lack of enthusiasm to invest in the accounts results in lack of a big enough pool of funds in the system, which makes it difficult for the system to grow in a sustainable way.
In some parts of the country, some retired workers could not draw money from their accounts in time and in full due to insufficient pool of funds.
"The reform aims to ensure that if a person works longer and contributes more to his account, he will get more after he retires," said Liu.
According to the ministry, 173 million people have participated in the corporate old-age pension system, as compared with 112 million in 1998.
In 2005, more than 43.5 million retirees are drawing money from their pension accounts.
The number of people aged above 60 years old in China has reached 11 percent of the 1.3 billion Chinese population, which puts great pressure on the social security system.
(Xinhua News Agency December 16, 2005)
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