Nationwide, China is facing a huge pension shortfall.
But in Guangzhou, the capital of south China's Guangdong Province, the municipal Labor and Social Security Bureau says they see no problems on the horizon.
Some 1.9 million people are carrying retirement insurance in Guangzhou, with 490,000 now drawing pensions.
"We do not see a shortage of funds," said Chen Min of the bureau. He declined to disclose the exact amount of the city's fund.
The bureau reports that in 2004, retirees received an average monthly pension of 934 yuan (US$112), with total annual payouts amounting to 5.5 billion yuan (US$662 million).
According to Chen, since about 6 billion yuan (US$722 million) is paid into the fund from each year, there will be no deficit.
With the pensioner population growing at a rate of about 25,000 each year, Chen indicated that another 270 million yuan (US$32 million) is needed annually.
"We are confident we will be able to handle it," he said.
However, pension funds come mostly from state-owned or large private enterprises. Relatively few small and medium-sized companies have retirement schemes for their aging employees, said labor bureau official Xie Yingjian during a recent conference arranged by the Multinational Corporate Club of Guangzhou.
Additionally, Xie pointed out, increasing numbers of SOEs are converting into privately owned companies, resulting in fewer payments into the pension pool.
Aggravating the situation is the fact that few younger workers are properly concerned about old-age money issues.
Du Ping, 25, works at a logistics company in Guangzhou, where her monthly income is about 3,500 yuan (US$421). She does not know if her company has a retirement system.
"I am only 25, and retirement is far away," she said. "If I had to pay a part of my salary for pension insurance, I would rather not be insured, since my salary is so low."
Many private companies take advantage of this disregard for the future. To make employees feel good about their incomes, they transfer money that should be used for insurance directly into salaries.
Retirees are not eligible to receive pensions unless they have paid retirement insurance premiums for more than 15 years.
Since the retirement pension system was not introduced in Guangzhou until 1985, people who are older than 40 now have difficulty in participating. China's standard retirement age is 55 for women, and 60 for men.
The city's large migrant population is another problem. The labor bureau says that the number of registered migrant workers in Guangzhou is more than 1 million.
Chen Min said that these workers can also take out retirement insurance, provided their employers contribute part of the premium.
"The number of years set for migrant workers to receive pensions is the same," Chen said. "If they are insured for over 15 years, they will receive a sum of money each month as their pension after they retire, even though they may not live in Guangzhou."
However, few employers of migrant workers are willing to pay into the system.
Zeng, a 22-year-old migrant worker from Henan Province, works in a restaurant in Guangzhou. He said he never heard of pension insurance and he guesses that his employers have not placed any money in the fund for him or his co-workers.
Chen did not provide an estimated number of insured migrant workers, but he acknowledged there is still a lot of work to be done to promote the policy.
Meanwhile, the Ministry of Labor and Social Security forecasts the number of retired people living in urban areas nationwide will reach 100 million in 2020, up from 70 million in 2010. There are currently about 48 million city dwellers of pensionable age.
But only 44.9 percent of urban employees and 85.4 percent of retired people are covered by pension plans. Most farmers work outside the pension system.
Earlier this month, Minister of Labor and Social Security Zheng Silin said the pension shortfall totals about 2.5 trillion yuan (US$301 billion). About 600 billion yuan (US$72 billion) in the personal accounts of working-age people has been diverted to support retirees.
Cai Zhenhong, deputy director of the ministry's Pension Department, said the government is preparing to introduce tough measures to encourage private and foreign companies to make sure their employees are not forgotten once they retire.
(China Daily March 28, 2005)
