Presentation Title Here

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Meeting of Directors of Social Security
Organizations in Asia and the Pacific
Chinas old-age insurance background, challenges
and proposed measures
Pi Dehai Ministry of Labor and Social Security
P.R.China
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Contents of the Presentation

• Background
• Challenges and opportunities for Chinas old-age
  insurance development
• Proposed measures

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1.Background
In early 1950s, China put in place an old-age
insurance system compatible with the productivity
level and economic system. Since 1980s, the
Government has made great efforts to reform the
old-age insurance system, aiming at building one
compatible with the socialist market economic
system.
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1.Background

• Now Chinas old-age insurance system
  consists of three parts
• urban enterprise old-age insurance
• old-age insurance for state organs
• and institutions
• old-age insurance for rural areas

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1.Background
Part of the contributions is used to set up
social pooling fund
Enterprise 20
Part of the contributions goes to the individual
accounts
Contribution
go entirely to their individual accounts
employee 8
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1.Background
20 of the workers average wages in respective
localities in the previous year
Basic
Pension
1/120 of the accumulation in the account
Individual account
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1.Background
After 20 years of exploration, great
achievements have been made.
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1.Background
1.
10 years ago, China replaced the
pay-as-you-go under the basic old-age insurance
with a partial funding by combining social
pooling with individual accounts.
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1.Background
2.
The basic old-age insurance is applicable to
all urban enterprises, self-employed and people
in flexible employment.
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1.Background
3.

•   Costs are shared by multiple parties.

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1.Background
4.

• Since 2000, entrusted banks and post offices pay
  old-age pensions to the retirees. Since 2002,
  greater efforts have been given to socialized
  management of the retired.

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1.Background
5.

•   In addition to participating in the
  compulsory basic old-age insurance, enterprises
  with suitable conditions may set up annuities for
  their employees. In addition, the state also
  encourages personal savings for old age.

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1.Background
6.

•   In March 1998, the Ministry of Labor and
  Social Security was established.

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1.Background
7.

•   In 2001, the Chinese Government began to
  carry out pilot project of injecting funds into
  individual accounts in Liaoning Province. The
  pilot project was expanded to Jilin and
  Heilongjiang provinces in 2004.

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• 2. Challenges and opportunities

• Challenges
• Population ageing
• Urbanization
• Diversified forms of employment

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• 2. Challenges and opportunities

• Population ageing
• The ratio between the workers paying
  contributions and the pensioners decreased from
  51 in 1992 to 31 in 2004. It is projected that
  in 2020 the urban dependency ratio will become
  2.51.

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• 2. Challenges and opportunities

• Urbanization
• It is estimated that in 20 years time, Chinas
  urbanization rate will rise from 40 to 60.

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• 2. Challenges and opportunities

Diversified forms of employment Along with the
economic structure adjustment, deepening of
enterprise reform and the change in economic
ownership, a new employment pattern has taken
shape.
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• 2. Challenges and opportunities

• Opportunities
• The government attaches high importance to the
  issue
• The economy continues to develop
• There are social consensus and expectation from
  the public
• Intensified international exchange and
  cooperation continues

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3. proposed measures
Injecting funds into individual
accounts.
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3. proposed measures
Broadening the investment channels to
preserve and increase the value of the funds.  
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3. proposed measures

• Expanding the old-age insurance coverage.

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3. proposed measures

• Improving the formula for the basic
  old-age pension to form an incentive mechanism

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3. proposed measures

• Strengthening the fund regulation by
  raising pooling level

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3. proposed measures

• Perfecting multi-layer old-age insurance system

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3. proposed measures

• Reforming the old-age insurance system for
  state organs and institutions

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3. proposed measures

• Strengthening legal construction and
  management of old-age insurance.

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Thank You!