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The Pain of a Pension Deficit (7)

(Beijing Review)

08:53, August 24, 2012

Reform needed

Zheng said in the long run, China needs to reform its social security system. Without reforms, payment of pensions will be unsustainable.

Tang Jun, Secretary General of the Social Policy Research Center of the CASS, said the government should make proper middle- and long-term plans on the proportion of government subsidies in the pension fund system, the amount of incomes and expenditures of the pension fund and the methods to make up the shortfall so as to ensure reforms of the social security system.

Tang thought the government should now particularly consider, based on an accurate estimation of pension fund payers and the population of retirees, formulating different schemes such as raising the retirement age and transferring shares of listed state-owned enterprises.

At present, state-owned assets supervision and administration commissions hold 13.7 trillion yuan ($2.16 trillion) in shares of listed state-owned enterprises. If 80 percent of the shares are transferred to the social security system starting from 2013, together with the practice of raising the retirement age, China's pension fund system will maintain surplus for 30 years. Incomes and expenditures of the pension fund system will keep balanced until 2050.

As for people's appeals of reforming the endowment insurance system, Yin said the country has decided to steadily push forward reform of the pension system for employees of enterprises, government agencies and public institutions. The MOHRSS has been carrying out experiment in Shanxi and other four provinces and municipalities since 2009. In 2011 the Central Government issued guiding opinions on reforming the endowment insurance system of public institutions.

Yin said Shanxi and four other provinces and municipalities have made preparations for the reform, but because there are no supporting policies, detailed reforming measures have not been formulated. "We will join efforts with related departments to guide the five pilot provinces and municipalities to formulate detailed implementation schemes and supporting policies as soon as possible and report to the State Council in due course for approval," said Yin.

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