China's economic future hinges on pensions overhaul

Subject

Social security reform in China.

Significance

China's social security system is targeted for reform. Premier Li Keqiang's 'work report' to the National People's Congress (NPC) on March 5 pledged to increase the basic pension, lower premiums for unemployment insurance and centralise the country's fragmented urban pension system. Several days later, human resources minister Yin Weimin said, on the sidelines of the NPC, that the government intends to introduce a plan in 2017 to raise the country's statutory retirement age.

Impacts

• Lower employers' and employees' contribution rates would encourage compliance, and thus coverage, by making contribution more affordable.
• Statutory retirement ages will have to be raised, in the face of strong public opposition.
• Increasing the statutory retirement age will have to be accompanied by more job opportunities for middle-aged and elderly workers.
• The competing interests of different provinces and regions could hamper social security reform.
• Further relaxation of the household registration system will be needed to expand social insurance coverage.