Raising Funds for Basic Old-Age Insurance Through Multiple Channels
As the aging of the population quickens and the number of retirees increases
steadily, the pressure on the payment of funds for basic old-age insurance is
becoming ever greater. In order to make sure that basic pensions are paid in
full and on time, the Chinese Government is raising such funds through multiple
channels.
-- Practicing joint premium payment by both enterprises and employees.
Generally the premiums paid by enterprises will not exceed 20 percent of the
total wage bill of the enterprise, with the specific proportion being determined
by the people's governments of provinces, autonomous regions and municipalities
directly under the Central Government. Individual employees pay eight percent of
their wages as premiums, whereas self-employed individuals and those who are
employed in a flexible manner in urban areas pay an amount equal to about 18
percent of the average wage in their locality. In 2003, the basic old-age
insurance premium paid by enterprises nationwide totaled 259.5 billion yuan.
-- Increasing the subsidy outlay from the government financial budget for
basic old-age insurance funds. The state has called upon governments at all
levels to increase the momentum of restructuring their financial expenditure and
raise their input into social security. In 2003, state budgets at all levels
contributed 54.4 billion yuan toward basic old-age insurance funds,of which 47.4
billion yuan came from the central budget.
-- Establishing a national social security fund. In 2000, the Chinese
Government decided to create a national social security fund. Its sources
include: funds acquired from reducing state shareholding, stock ownership
assets, funds from the central budget, funds raised by other means approved by
the State Council, and investment returns. The national social security fund is
administered by the National Social Security Fund Executive Council, and is
operated on market principles in accordance with the procedures and requirements
prescribed by the "Interim Measures for the Management of the Investment of the
National Social Security Fund." The national social security fund provides an
important financial reserve for the implementation of old-age insurance and
other social security programs. By the end of 2003, it had accumulated over 130
billion yuan.
Promoting the Socialization of Management and
Services for Old-Age Insurance
In the past, Chinese enterprises were responsible for both the issuance of
basic pensions to their own retirees and the administration of those retirees.
Now, to ensure that all retirees receive their basic pensions in full and on
time, and lessen the burden of social affairs on enterprises, the government is
actively practicing the delivery of basic pensions by social service
institutions. At the end of 2003, the basic pensions of retirees from
enterprises were all delivered by social service institutions, and 84.5 percent
of those retirees were under the administration of such institutions.
In 2003, the Chinese Government began to implement an information-based labor
security project, or popularly called "golden social security project," in order
to raise the overall management level of social insurance and to meet the needs
of the floating labor force to continue with their social insurance coverage
once they change jobs. The goal of the project is to realize computer-based
networking of social security information across the country. So far the
networking of old-age insurance information between the Central Government and
the provinces has been initially effected.
Establishing a Multi-Level Old-Age Insurance
System
In recent years, the Chinese Government has made great efforts to build a
multi-level old-age insurance system. In addition to participating in the
compulsory basic old-age insurance, enterprises with suitable conditions may set
up annuities for their employees. Both enterprises and individuals will
contribute to this annuity, which will be accumulated wholly for that specific
purpose and managed in the form of personal accounts. The enterprise annuity
funds will be managed and operated in accordance with the market mechanism. In
2003, nearly seven million people participated in the enterprise annuity
program. In addition, the state also encourages personal savings for old age.
