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Retirement Age Hike Won't Solve Pension Woes: Survey

An online survey has found strong opposition to a proposal to raise the mandatory retirement age in order to address the huge deficit in the national pension fund.


The poll, conducted by China Youth Daily, showed that 77 percent of 2,743 people surveyed were against the proposal.


It has been reported that the nation's social security fund was 800 billion yuan (US$102 billion) in the red at the end of last year.


The Ministry of Labor and Social Security is studying the feasibility of raising the retirement age, which can delay the payment of pensions. A proposal will be put forward to higher authorities within a month.


However most people, including head of the National Social Security Fund, Xiang Huaicheng, believe that the proposed rise in retirement age will worsen the unemployment situation.


Xiang was quoted by China Youth Daily yesterday as saying that it is unfeasible to increase the mandatory retirement age in China at present, because the increase of new jobs mainly relies on vacancies provided by retirees.


Official statistics show that 24 million urban residents enter the job market each year, but there are only 11 million new openings.


About 60 percent of the surveyed netizens said reducing unemployment is a more urgent problem than the social security fund deficit.


The ministry now attributes the shortfall in pension funds to the fact that tmany employees retire in their 40s or 50s, much earlier than the requisite age 60 for men and 55, or in some cases 50, for women


If an employee retires five years early and is paid 450 yuan (US$56.25) each month, the pension fund has to pay him an additional 27,000 yuan (US$3,375) and loses the 7,000 yuan (US$875) that he should contribute in that period.


If 1 million employees retired five years before the mandatory age, this could mean a 34 billion yuan (US$4.25 billion) hit for the pension fund.


The ministry's explanation is accepted by only 35.8 percent of those surveyed. A majority 84.2 percent, believed the deficit was caused by the embezzlement.


At least 10 billion yuan (US$1.2 billion) of social security funds has been misappropriated between 1986 and 1997, China Youth Daily reported.


An official in Jinhua, Zhejiang Province, was found to have embezzled more than 100 million yuan (US$12 million) of the fund. Shanghai Labor and Social Security Bureau Director Zhu Junyi was charged with misappropriating 3.2 billion yuan (US$400 million). Nearly 180 million yuan (US$22.5 million) was found to be embezzled in Taiyuan, Shanxi Province. Similar cases have also occurred in Heilongjiang and Henan provinces.


"The initial plan was that the money in individual accounts cannot be moved until the person's retirement," China Youth Daily quoted Xiang Huaicheng as saying.


But in order to ensure the old people who have not contributed to the pension fund but made contributions to the country also enjoy full benefits, money in the accounts of middle-aged and young people has been used, Xiang said.


After 2001, the government realized the problem and initiated a pilot program in Liaoning Province, in which each individual has his or her own pension account. At present, 11 provinces are running pilot programs to establish accounts for individuals, which means that embezzlement will not be as easy as before.


More than 70 percent of those surveyed said they would rely on the pension to support themselves in old age, instead of relying on their children, a traditional idea in China.


Only 8.4 percent of netizens said they would rely on children. Other choices include saving money when young, working after retirement and buying property.


(China Daily December 5, 2006)

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