The funds invested within an endowment are enough to satisfy the pension needs of retired people in Guangzhou, capital of south China's Guangdong Province, according to the Guangzhou Labor and Social Security Bureau.
People insured against old age in Guangzhou number 1.89 million, with pensioners now at a level of 490,000.
"We do not see a shortage of funds," said Chen Min, an official of Guangzhou Labor and Social Security Bureau. But he refused to disclose the exact amount of the city's endowment.
According to bureau statistics from last year, a retired person receives an average monthly pension of 934 yuan (US$112).
"We have to pay out 5.5 billion yuan (US$662 million) a year in the pension program," said Chen.
Thanks to a well-balanced endowment system in Guangzhou, Chen said there will not be a deficit, with about 6 billion yuan (US$722 million) in funds from insurance premiums added to the endowment each year.
In Guangzhou, about 25,000 people become pensioners each year. Chen said another 270 million yuan (US$32 million) is needed annually to satisfy the increased retired population.
"We are confident we will be able to handle it," the executive said.
The cheerful situation within Guangzhou's endowment program does not prove there are no problems within the city's social pension system, however.
Pension funds come mostly from State-owned or large-scale private enterprises. A large number of small and middle-sized companies do not have retirement schemes for their ageing employees, Xie Yingjian, a bureau official said during a recent conference arranged by the Multinational Corporate Club of Guangzhou.
In addition, Xie said more and more State-owned enterprises are turning into privately owned firms, resulting in fewer fund sources for retirement plans.
He said in such firms younger workers are not yet properly concerned about money issues in their old age.
Du Ping, 25, works at a logistics company in Guangzhou. Her monthly income is about 3,500 yuan (US$421).
She said she does not even 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 to be insured, since my salary is so slim."
Xie admitted that some of young people do not attach importance to social insurance. Many private companies take advantage of that by transferring money that they should use for insurance directly to employees' salaries so employees feel good about their larger incomes.
Chen Min said the bureau has the responsibility of promoting the importance of retirement systems to Guangzhou's residents.
He said retired people cannot receive pensions unless they have paid insurance premiums for more than 15 years.
Since the social 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.
On the other hand, Guangzhou is a city with a large number of migrant workers, whose official residency is registered elsewhere.
The bureau said the number of registered migrant workers in Guangzhou is over 1 million.
Chen said such workers are allowed to insure against old age as long as 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."
Although migrant workers have the right to enjoy endowment insurance, most of their employers simply ignore the program.
Zeng is a migrant worker from Henan Province. The 22-year-old man is working in a restaurant in Guangzhou.
He said he never heard of pension insurance. And he guessed that his employers have not placed any money in the insurance program for him and his co-workers.
Chen did not provide an estimated number of insured migrant workers, but he acknowledged there are still lots of work to do to promote the policy.
(China Daily March 28, 2005)
