More than a million migrant workers in Guangdong Province may not receive pensions when they retire. Being registered as residents outside Guangzhou, they are dependent on their employers to set up pension schemes and to contribute to the premium payments.
Chen Min, an official of the Guangzhou Labour and Social Security Bureau, recently told the China Daily that migrant workers need a contribution from their employer to be able to insure for their retirement. "The number of years set for migrant workers to receive pensions is the same [as for other local workers]. If they have made payments for 15 years or more, they will receive a sum of money each month as their pension after they retire, even though they may not live in Guangzhou," he said. The problem is that most employers simply ignore the programme.
The report quoted a 22-year-old migrant worker, surnamed Zeng, from Henan Province, who was working in a restaurant in Guangzhou, as saying that he had "never heard of pension insurance and he believed his employers had not put any money in the insurance programme for him or his co-workers."
According to the Guangzhou Labour Social Security Bureau, 1.89 million people in Guangzhou have pension insurance plans, and 490,000 retirees are now receiving pension payments. The average monthly pension is 934 Yuan (US$112).
Chen Min estimates that the bureau pays out 5.5 billion Yuan (US$662 million) each year in pension payments. As the number of pensioners is increasing by 25,000 each year, another 270 million Yuan will be needed annually to cover the growing population of retirees. However, Chen maintains that the bureau is able to handle the situation. "We do not foresee a shortage of funds." However, other informed observers – including the German government, which recently published a long analysis of China’s social security system – predict a major shortfall in pension funds over the coming years.
Most state-owned or large private enterprises have pension funds, but many small and medium-sized companies do not have any retirement schemes for their employees, according to Xie Yingjian, another official of the Guangzhou Labour and Social Security Bureau. During a recent conference arranged by the Multinational Corporate Club of Guangzhou, Xie said that when state-owned enterprises are privatised, as is happening more and more, they usually do not retain their retirement schemes. He also made the important point that very few young workers are aware of the fact that they should make provision for their retirement.
Du Ping, 25, who works at a logistics company in Guangzhou, earning a monthly salary of about 3,500 Yuan (US$421), said that she did not know whether her company had a retirement system. "I am only 25, and retirement is far away [for me]," she said. "If I had to pay part of my salary for pension insurance, I would rather not to be insured, since my salary is so low." Many private companies take advantage of this attitude of young workers, and simply reallocate the pension premium sum to augment the monthly wage.
Meanwhile, the Ministry of Labour and Social Security forecasts that the number of retired people living in urban areas throughout China will reach 100 million in 2020, up from 70 million in 2010. There are currently about 48 million city dwellers of pensionable age. However, only 44.9 percent of urban employees and 85.4 percent of retired people are covered by pension plans, according to the government. Most farmers work outside the pension system and have no retirement pension cover at all.
In early March, Minister of Labour and Social Security Zheng Silin said that the pension shortfall nationwide totals about 2.5 trillion Yuan (US$301 billion). Worse, about 600 billion Yuan (US$72 billion) in the personal pension accounts of working-age people has been diverted to support people who have already retired.
Cai Zhenhong, deputy director of the ministry's pension department, said that the government is preparing to introduce tough measures to induce private and foreign companies into making sure their employees are provided with retirement pensions.
Sources: China Daily (28 March 2005), China.org.cn
1 June 2005
Chen Min, an official of the Guangzhou Labour and Social Security Bureau, recently told the China Daily that migrant workers need a contribution from their employer to be able to insure for their retirement. "The number of years set for migrant workers to receive pensions is the same [as for other local workers]. If they have made payments for 15 years or more, they will receive a sum of money each month as their pension after they retire, even though they may not live in Guangzhou," he said. The problem is that most employers simply ignore the programme.
The report quoted a 22-year-old migrant worker, surnamed Zeng, from Henan Province, who was working in a restaurant in Guangzhou, as saying that he had "never heard of pension insurance and he believed his employers had not put any money in the insurance programme for him or his co-workers."
According to the Guangzhou Labour Social Security Bureau, 1.89 million people in Guangzhou have pension insurance plans, and 490,000 retirees are now receiving pension payments. The average monthly pension is 934 Yuan (US$112).
Chen Min estimates that the bureau pays out 5.5 billion Yuan (US$662 million) each year in pension payments. As the number of pensioners is increasing by 25,000 each year, another 270 million Yuan will be needed annually to cover the growing population of retirees. However, Chen maintains that the bureau is able to handle the situation. "We do not foresee a shortage of funds." However, other informed observers – including the German government, which recently published a long analysis of China’s social security system – predict a major shortfall in pension funds over the coming years.
Most state-owned or large private enterprises have pension funds, but many small and medium-sized companies do not have any retirement schemes for their employees, according to Xie Yingjian, another official of the Guangzhou Labour and Social Security Bureau. During a recent conference arranged by the Multinational Corporate Club of Guangzhou, Xie said that when state-owned enterprises are privatised, as is happening more and more, they usually do not retain their retirement schemes. He also made the important point that very few young workers are aware of the fact that they should make provision for their retirement.
Du Ping, 25, who works at a logistics company in Guangzhou, earning a monthly salary of about 3,500 Yuan (US$421), said that she did not know whether her company had a retirement system. "I am only 25, and retirement is far away [for me]," she said. "If I had to pay part of my salary for pension insurance, I would rather not to be insured, since my salary is so low." Many private companies take advantage of this attitude of young workers, and simply reallocate the pension premium sum to augment the monthly wage.
Meanwhile, the Ministry of Labour and Social Security forecasts that the number of retired people living in urban areas throughout China will reach 100 million in 2020, up from 70 million in 2010. There are currently about 48 million city dwellers of pensionable age. However, only 44.9 percent of urban employees and 85.4 percent of retired people are covered by pension plans, according to the government. Most farmers work outside the pension system and have no retirement pension cover at all.
In early March, Minister of Labour and Social Security Zheng Silin said that the pension shortfall nationwide totals about 2.5 trillion Yuan (US$301 billion). Worse, about 600 billion Yuan (US$72 billion) in the personal pension accounts of working-age people has been diverted to support people who have already retired.
Cai Zhenhong, deputy director of the ministry's pension department, said that the government is preparing to introduce tough measures to induce private and foreign companies into making sure their employees are provided with retirement pensions.
Sources: China Daily (28 March 2005), China.org.cn
1 June 2005
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