Society

Pension change urged for 240 million migrant workers

By Zhou Wenting (China Daily)
Updated: 2011-07-06 07:16

BEIJING - With millions of migrant workers pouring into China's cities every year from the countryside, social security experts are calling for a mechanism that will link the nation's urban and rural pension systems.

Currently, there are two strands to China's pension system - the new rural pension system that was introduced in October 2009 and one geared toward people living in cities.

The new rural pension system requires villagers to contribute for at least 15 years before they can qualify for a pension. Problems can arise when rural residents pay into that system from their home villages for several years before moving to a city as a migrant worker and participating in the urban pension system.

Li Chao, an official from the office of urban and rural residents' pensions in Qingdao city, Shandong province, cited the example of a farmer who had contributed to a rural pension system for 10 years before joining the urban one after moving to a city and signing a labor contract with his employer. Li said no one knew how to combine the two types of contributions because "there is no calculation method".

"The common practice now is to let workers start paying into the urban pension system and the social security office gives them back the money they had contributed to the rural pension system. That means the money the person has paid into the rural pension does not produce any gains," Li said.

Experts said the problem needs to be resolved because it affects the nation's 240 million migrant workers.

The fact that more and more rural residents are pouring into the cities each year only adds to the pressure to create a merged system, he said.

"A large proportion of migrant workers work in the cities during the summer and winter but go back to their villages in the spring to plant crops and return again in the autumn for the harvest," said Bill Birmingham, a pension expert from the EU-China Social Security Reform Cooperation Project.

An integrated and transferable social security system that merges the two existing systems is the best way to resolve the problem, say economics experts.

"This is a loophole in the newly implemented system but it is expected that the problem will be resolved in the near future through detailed rules in the Social Security Law," said Hu Xingdou, an economist at the Beijing Institute of Technology.

Endowment insurance experts also said rural people should take the issue of pensions more seriously because the rate of participation is low among people in the countryside compared to their urban counterparts.

Wang Xiangtao, a 42-year-old native of the rural area of Xingyang city in Henan province, told China Daily she and her husband do not participate in the rural pension system because they believe the returns are unattractive.

"Few people around me take part in the pension program," Wang said.

Birmingham said the need to rationalize the pension systems is made more urgent by the changing face of China.

"People used to believe that their offspring should provide for them in their twilight years but their children these days may be away from home working as migrant workers, which is different from the situation in past generations," he said.