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Lawmakers question ministers on pension plans

Xinhua, December 29, 2014 Adjust font size:

Differentiated pension policies across regions, divided programs and depreciating social security funds have caught the eye of China's lawmakers as they questioned cabinet members in Beijing on Sunday.

Vice Premier Ma Kai and several cabinet ministers joined lawmakers to review the country's social security programs at a bi-monthly legislative session of the Standing Committee of the National People's Congress (NPC).

In response to lawmakers' questions on the financial situation of pension programs, Ma assured them the programs have received more than they expended.

By the end of November, about 837 million Chinese joined pension programs, including 338 million employed urban residents, while about 226 million received pensions from the programs.

However, the future situation is not very optimistic as the growth of revenue has been slower than that of expenses, Ma said.

China is an aging society, with people above 60 numbering more than 200 million in 2013 and accounting for 14.8 percent of the whole population. It is estimated that by 2053, about 487 million Chinese will be older than 60, accounting for one-fourth of the world's senior citizens.

To cope with increasing pressure from a graying population, the government will need a policy package to boost the revenue and streamline the management of pension programs, he said.

It might consider postponing the retirement age, channeling more dividends of state-owned enterprises to social security funds and encouraging citizens to try different pension plans, he said.

Several lawmakers pointed out that, although China has included a large part of its population in pension programs, policies vary according to their identities and where they live.

Currently, China has different social security programs, including pension programs, for rural residents, urban residents who do not work for certain employers, and employed urban residents. Civil servants and staff of some public institutions are not included in social security programs but come under old state policies. The costs and benefits vary widely among different programs.

Also, policies in different provinces vary a lot and there is a huge gap between rich eastern regions and less developed western ones.

Due to these differences, it is very difficult for people to transfer their pension program from one province to another when they move, said Prof. Zheng Gongcheng, with Renmin University of China and an NPC Standing Committee member, at the review.

Yin Weimin, human resources and social security minister, told lawmakers that unifying these pension programs is a priority and the government will work out a plan next year.

How to divide the power and liability between the central and local governments as well as among different local ones is the most difficult part, Yin said.

The plan, still being drafted, will unify the rules across the country on how to set the cost and benefits of pension programs but also allow provincial governments to adjust according to local situations, he said.

Next year the government will also start to include the 40 million civil servants, Party officials and public institution staff in the social security programs.

Hao Ruyu, an NPC Standing Committee member, noted that the money in people's social security accounts has depreciated due to its limited investment options.

The funds, mostly in the hands of provincial governments, can only be saved in banks or used to buy treasury bonds, which are safe but have low returns.

Yin confirmed that last year the money in the social security accounts totaled 3 trillion yuan (489 billion US dollars) but its annual interest rate was only about 2 percent, lower than CPI growth.

The government plans to diversify the investment but has yet decided how to do it, he said, adding that since the money is huge and scattered among different local governments, the central government has to be very cautious.

Finance Minister Lou Jiwei told lawmakers that the central government is working to inject more profits from state-owned enterprises into public services including pension programs.

So far only about 10 percent of profits from the state companies, roughly 100 billion yuan, has been handed to the treasury and the rate will increase to 30 percent in 2020, Lou said.

During the three-hour review, ministers of health and civil affairs also answered lawmakers' questions about medical insurance programs and assistance to needy people.

In recent years, the top legislature has often invited cabinet officials to attend inquiry meetings during its bimonthly sessions, as an important way for the legislature to supervise the government.

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