The State Council held an executive meeting on the 7th of February, during which it made an important decision: China is to unify its urban and rural pension insurance systems. Many researchers have pointed out that this is the first time that the pensions of urban and rural residents are taken together as a matter of policy, and that this will be an important step forward in the improvement of the people’s welfare.

Allowing the rural areas to enjoy the benefits of reform

Researchers claim that establishing a unified urban and rural pension insurance system coincides with the wishes of the people, because it will allow all the inhabitants of rural areas to participate in modernization and share in the achievements of reform.

In recent years, government at all levels has made continuous and efficient efforts to improve the rural social insurance system, including the establishment and perfection of the new rural cooperative medical service system and of the pension insurance system. Some problems with these schemes, such as the narrow range of coverage provided and the relatively low guarantees they offer, are however yet to be fundamentally resolved.

Professor Li Gang, from the School of Politics and Administration of Chang’an University, says that the Third Plenary Session of the CPC Central Committee has focused on the issue of pension insurance, reflecting the positive attitude of the central government towards welfare issues, and displaying its determination to solve social problems with a reforming spirit.

“We should not only strengthen the function of family support, but also explore the new pension patterns which are due to the progress of urbanization in China”, suggests Pei Chengrong, director of the Institute of Economics of the Shaanxi Academy of Social Sciences. Pei adds that building up a unified urban and rural endowment insurance system is a necessary requirement for China’s economic and social development, and this means that the drive to solve the fragmentation of the old-age insurance system across the country has now entered a decisive stage.

China currently still needs to face the practical issues of unbalanced regional development and of the huge gap between urban and rural areas. These problems impede the harmonious development of the economy and society and slow down the pace of urbanization. Pei claims that relying on family support is now the most ordinary approach to retirement in rural areas, but this will become less viable once many elderly people have no offspring living with them or who have time to take care of them. For this class of old people, it is necessary to establish a new type of pension service system, which should regard the village and community as a unit, and should ensure that the urban areas stimulate the development of the surrounding rural areas. Its establishment will be conducive to promoting urban-rural migration and enhancing social security, and it will also drive consumption and encourage innovation and entrepreneurship.

Aiding social stability and economic growth

Some scholars claim that the establishment and improvement of certain social mechanisms, including the unified urban and rural pension insurance system, will be beneficial to the formation of a new type of relationship between workers and peasants and between urban and rural areas more generally.

Professor Liu Jintian, from the Northwest University of Politics and Law, says that the government has always paid high attention to the construction of a pension insurance system. Since the founding of the People’s Republic of China, many laws and regulations on the old-age insurance system have been issued, stipulating its coverage area and methods of collection, as well as how to combine social pooling with individual accounts.

Liu also claims that the asset value of numerous investment-oriented pension plans has shrunken due to the financial crisis, meaning that the issue of support for the elderly has become more pressing across the world. At a time when all countries are dealing with the problem of aging populations, China has been endeavoring to build up a wide ranging pension insurance system which can benefit as many people as possible. This will be conducive to the social stability and sustainable development of the country.

The Chinese version appeared in Chinese Social Sciences Today, No. 557, 10th February, 2014.

Chinese link: http://www.csstoday.net/xueshuzixun/guoneixinwen/87610.html

　　Translated by Chen Meina

　　Revised by Gabriele Corsetti