Elderly people interact with a robot at a service center for the elderly in Zhengzhou, central China’s Henan Province, April 20, 2023. Photo: VCG
China has raised the basic monthly pension for retirees nationwide to 3.8% from the 2022 level, along with the launch of a fairer and more balanced distribution mechanism, as the nation strives to secure and improve livelihoods, a joint notice issued by the Ministry of Human Resources and Social Security and the Ministry of Finance announced on Monday.
Every year since 2005, the basic pension has been increased. Experts said the move is part of the government’s ongoing efforts to provide stronger guarantees for the quality of life for retirees as the country prepares for an aging society.
To ensure a fair distribution of pensions, incentive mechanisms are being adopted, such as paying more to get more and paying over longer periods to get higher payouts, the notice said.
Each provincial-level region determines its own ratio and adjustment level with the national adjustment ratio as the upper limit.
The level of pensions can be adjusted accordingly in favor of older pensioners and pensioners from remote areas.
The notice also urged localities to take practical measures to strengthen the management of income and expenditure of the pension insurance fund, while making financial arrangements in advance to ensure that the basic pension is paid. in full and on time and that no new backlog will arise.
The increase in pension on an annual basis fully reflects the importance the government attaches to people’s livelihood and has a very positive effect on improving the pension benefits of the elderly, said Li Changan, professor at the China Academy of Open Economy Studies at the University of International Business and Economics, the Global Times told Monday.
“The importance of the continued increase in pensions is obvious. It is conducive to improving the retirement benefits of retirees as well as increasing the level of consumption and capacity of the elderly,” said Mr. .Li.
At the end of 2022, there were more than 280 million people aged 60 and over in China, or 19.8% of the population. Of that total, 210 million were aged 65 and over, accounting for 14.9% of the total, according to media reports.
As the pension increases, the growth rate decreases from year to year. In 2020, the ratio was 5% and it has fallen by around 0.5% per year.
The pension adjustment is based on the basic principles of economic development level and stable treatment of pensioners, Li said.
Data released by the Ministry of Human Resources and Social Security shows that China’s working-age population has shrunk since 2012, with an average annual decline of more than 3 million, and is expected to shrink by 35 million over the next of the 14th five-year plan. period (2021-25).
The increase in the retired population means that society as a whole has to pay more pensions, which places higher demands on the social pension service system.
China has established the largest social security system in the world. By the end of 2022, the number of people participating in national basic pension insurance had reached 1.05 billion, a year-on-year increase of 24.3 million.
The basic national pension has steadily increased over the years, benefiting hundreds of millions of pensioners.
To continue doing a good job on the pension system, China is broadening the pension payment base by expanding social security coverage and strengthening management.
“The investment scope should be expanded, including the scale of capital held by the state to enrich pension insurance,” Li said.