ILO and China Discuss Pension Reform

ILO and Ministry of Human Resources and Social Security (MOHRSS) jointly organized a seminar on Reform of Pension Adjustment in Beijing Conference Center.

On 1 September 2017, ILO and Ministry of Human Resources and Social Security (MOHRSS) jointly organized a seminar on Reform of Pension Adjustment in Beijing Conference Center. Government officials from MOHRSS, the National Development and Reform Commission and Ministry of Finance, social partner representatives from All-China Federation of Trade Unions and China Enterprise Confederation, renowned Chinese and international experts from major think tanks, research institutions and universities joined the discussion to give suggestions on the future direction of reform of pension adjustment.

Pension adjustment features high on the 13th Five-year Plan of China. It is a topic that has continuously attracted wide public attention. From 2006 to 2017, the government increased the pension for retirees covered by the Urban Employees Basic Old-age Insurance for 13 successive years. As a result the average monthly pension of urban employees increased from 700 yuan in 2005 to 2362 yuan in 2016. Though pension growth rate for urban employees during this period is close to average wage growth of urban employees, there were various problems in the pasts pension adjustment measures, including the gap between the pension levels of employees and civil servants, the lack of indexation and automatic trigger mechanism, worries voiced by many over fund sustainability, disincentive for people to work longer, etc.

To address these issues, ILO and ISSR carried out a joint research project on Reform of Pension Adjustment. The findings and policy recommendations of this research have been presented at the seminar. The participants discussed what should be the future direction of pension adjustment under the overall pension reform and agreed on the following:

The adjustment mechanism should protect the real purchasing power of the retired and also allow them to share the economy’s productivity gains. To this end, it is important to establish a regular pension adjustment mechanism as soon as possible. The pension adjustment mechanism should be scientific and constantly reviewed and monitored to understand income situation of pensioners and risk of absolute and relative poverty. Pension adjustment is only one part of the pension system. Therefor the participants agreed that some challenges such as improving sustainability, strengthening the incentive mechanism for longer and more contribution and raising the protection level of the residents’ scheme need to be addressed parametric reform of the pension system itself.

Based on the comments and suggestions, the ILO/ISSR joint research report will be revised and submitted to MOHRSS for its consideration in developing the policies on pension adjustment.

Around 50 participants from different ministries, provincial social security administrations, social partners, academia and media attended the seminar. Tim De Meyer, Director of ILO Country Office for China and Mongolia, and Hao Bin, Director-General of International Cooperation Department of MOHRSS, delivered opening speeches. Jin Weigang, Director-General of the Institute of Social Security Research (ISSR) of MOHRSS, facilitated the discussions.