The 20th of each month is an important day for Hui Huaijin, a retired worker living in Shanghai’s Pudong New Area. Early in the morning, she puts her current account book in her pocket and goes to the Pusanlu Branch of the Bank of Shanghai or simply reach a nearby ATM to draw her monthly pension.
By the end of last year, a total of 1.98 million Shanghai retirees like Hui Huaijin had received their pension payments from banks instead of from their old enterprises.
Establishing this socialized pension payment system is a breakthrough in China’s social security system. Retired workers are now separated from enterprises and institutions, and looked after by their local communities, and their pensions are gradually coming to be paid by social service agencies.
The basic form of socialized pension payments is that social service agencies open accounts with state-owned commercial banks or post offices for retired workers, and transfer their pensions to the accounts. In this way it is guaranteed that retired workers would get their pensions from the banks or post offices in time.
Since 1998, pensions have basically been paid to retired people in full in the areas where socialized payment has been instituted, whereas delays in payment are frequent in the areas where pensions are still given out by the enterprises themselves. Separating pensions from enterprises has become an inevitable trend, as well as a basic measure to ensure retired people’s rights.
The rate of socialized pension payments will reach 80 percent throughout the country this year from 47 percent last year, according to the Ministry of Labor and Social Security (MLSS). Meanwhile, reserve funds for the payments, together with a two-month risk warning system, will be established.
The MLSS demands that labor and social security departments at all levels negotiate and cooperate with banks and post offices to strictly carry out the regulations on abolishing or reducing the service charges of social service agencies, enterprises and retired workers.
Han Feng, an MLSS official, pointed out that the socialization of pension payments does not simply mean a transfer of funds; it involves the establishment of data bases and the checking of accounts. Hence, it will take a fairly long period of time to perfect.
“The MSLL has reached agreements with the China Industrial and Commercial Bank and China Construction Bank to provide the relevant cards and deposit books for socialized pension payments free of charge,” said Han. “Meanwhile, we are still negotiating with the Bank of China and the China Agriculture Bank on this matter.”
It is reported that Beijing will start the socialized pension payment scheme this October. By then, 83 percent of the city’s retired workers will get their pensions from banks or post offices. Funds earmarked for pension insurance are not to be diverted for any other purpose, according to financial departments of the municipality.
