Retirees' pensions get a hike

The State Council announced on Wednesday it will raise the pensions of retired enterprise employees this year.

It is the ninth consecutive year China has raised pensions for the group.

The State Council decided at an executive meeting presided over by Premier Wen Jiabao to raise the retired enterprise employees' pension by 10 percent from the 2012 level, or about 170 yuan ($27.30) per person per month, on Jan 1.

It is the first pension increase since Xi Jinping became top leader of the Communist Party of China.

In the past eight years, the average pension of retired enterprise employees increased from 700 yuan in 2005 to 1,721 yuan in 2012.

The meeting also urged the establishment of a mechanism to periodically adjust the pensions for retired enterprise employees.

Experts hailed the government's pension increase, saying the move shows the government's determination to close the group's pension gap with government officials.

China operates a twin-track pension system. The fiscal budget pays the contributions of employees of governmental organizations and institutions, but enterprise employees have to pay their contributions themselves.

Corporate employees pay 8 percent of their monthly wages to establish their pension accounts, and Chinese laws ensure that the more money workers pay into their pension accounts, the larger the pensions they will collect at retirement.

Workers must contribute for at least 15 years before they can receive a pension.

Generally, retired employees of government departments and State-funded institutions receive a much higher pension, around three times the sum collected by retired enterprise employees, according to Lu Xuejing, a social security expert at the Beijing-based Capital University of Economics and Business.

Wan Tianrong, a 51-year-old retiree from an auto parts manufacturer in Chongqing, said she is happy about the pension increase.

"My pension is only around 1,000 yuan a month," she said. "As prices continue to rise, I'm afraid I could not have made ends meet if the pension had been unchanged this year.

"I hope there will be a bigger increase next year for those who earn less-than-national-average pensions like me," Wan added.

Fan Ming, director of the institute of market economy at Henan University of Economics and Law, said the government's decision to raise pensions will not only help improve the group's livelihood but also boost domestic consumption.

Lu said currently retired enterprise employees' pensions are still low.

"It's policymakers' responsibility to improve people's livelihood, and making the decision to raise retirees' pensions through a meeting every year is not a normal mechanism for adjusting pensions," she said.

Retirees' pensions should change in accordance with the country's economic growth, employees' average wages and inflation, she suggested, adding that in the long run, the twin-track pension system should be integrated into one.

Hu Xiaoyi, vice-minister of human resources and social security, told Xinhua News Agency in December that the ministry plans to merge social insurances, including the retirement insurance of enterprise employees and people working for government and State-funded institutions. But he did not give a schedule for the plan.

Contact the writer at chenxin1@chinadaily.com.cn