China’s pension system is facing a shake-up as government employees must now put part of their pay into a pension scheme just as private employees do. International Channel Shanghai reporter Mi Jiayi reported this story from Beijing.
Reform of China's pension system has 40 million civil servants waryChina's pension system is facing a shake-up as government employees must now put part of their pay into a pension scheme just as private employees do. International Channel Shanghai reporter Mi Jiayi reported this story from Beijing.
As the country with the largest population in the world, China also has the largest retirement program. For decades it had a dual-track pension system – one for government employees and one for employees at private companies. Now the government wants to have government employees put part of their pay to the private system.
Since Oct. 2014, 40 million civil servants, including professor Zhang Lufa, have been required by the government to pay 8 percent of their salary into the state pension fund every month. What’s more, their final pension payouts will now depend on how long they have worked, how much they have paid into the fund, and what their final salary is compared is their local city average wage.
Prior to the shift, civil servants could count on a definite pension amount, equal to 80-90 percent of their final salary. Many are worried that they won’t be as protected under the new plan.
“Of course we’ll be affected. My school is a public institution, so we have to follow the new policy, which means that my future pension will be less than I expected,” Zhang said.
Government employees have long been thought to have the best pension plan in the country — a government job is known as an “iron rice bowl” — but the new policy treats them the same as any other employee.
To ease concerns, the Ministry of Human Resources and Social Security has said it will give all public servants a compensating pay raise this year averaging 300 yuan ($50) per month.