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Govt shirks pension contributions

By Yu Fenghui (Global Times)

13:28, October 23, 2012

With many still arguing about whether China should extend the country's retirement age to shore up the financial shortfalls facing its pension system, He Ping, director of the Social Security Research Institute, recently proposed increasing workers' personal pension contributions.

As I see it, neither raising the retirement age nor forcing people to pay more to the system will address the country's pension shortage.

Workers across China already pay about 8 percent of their salaries to the country's pension scheme, much more than elsewhere in the world. Yet, personal incomes in China are still relatively low, with the average person in the country making just one fifteenth of the average US income. With earnings so low and pension fees so high, it is unreasonable to ask people to have more pension money deducted from their wages.

Actually, the real cause behind the pension fund gap is a lack of government funding. In 2011, social security funds only accounted for about 15 percent of the government's fiscal expenditures, much lower than the 30 and 50 percent seen in most developed countries.

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