China: Central pension adjustment system to be established to address imbalances
Source: Asia Insurance Review | Jul 2018
China will establish a central pension management system for the basic pension funds of employees to balance payment burdens of local governments, according to an official document issued by the State Council, the Chinese cabinet.
A central adjustment fund will be set up to regulate pension funds in various provincial regions, a move that will help balance the burden various regions face when distributing funds. The adjustment fund will also guarantee timely and complete payments to retirees, the State Council said in a statement.
The new policy will be the first step towards national coordination, which will ensure a sustainable basic pension scheme, the statement said.
China has been striving to build a fair and inclusive social security network, with its basic pension insurance covering 915m residents at the end of last year. The payment of pensions currently varies in different provinces and regions due to economic imbalances. The basic pension funds are not transferable between different provinces, which means that a migrant workers in Shanghai contributes to the pension fund in Shanghai and are not allowed to transfer their pension balances to their home town after retiring. A