China is planning a major overhaul of its pension system after complaints of unfair wealth distribution and favoritism towards government employees.
Reported by Bloomberg:
China will abolish a dual-track pension system that favors government employees and discriminates against others to create a fairer retirement-savings system.
Under existing rules, about 37 million employees with government agencies, communist organs and public institutions don’t have to contribute anything to their pension savings, with the government paying pensions of about 90 percent of their pre-retirement salaries. Those employed by businesses from banks to bakeries must contribute 8 percent of their salary to pension accounts, on top of 20 percent of their wages that’s paid by employers to a pooled pension fund. On average, private retirees end up with 40 percent of their working pay.
As the system has increasingly become a source of resentment among the public, Vice Premier Ma Kai said yesterday that the State Council and the ruling Politburo have agreed to implement a “unified” pension system, and government employees will have to contribute to their own pension accounts, the official Xinhua News Agency reported.
The report didn’t provide a timetable for the reforms.
Approximately 338 million people are covered by China’s pension system.
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