Migrant workers will benefit from reforms to pensions, said Hu Xiaoyi, deputy head of the Ministry of Human Resources and Social Security
, at a press conference in Beijing.
The reform, announced by the State Council on February 7, will unify the rural and urban pension systems. The move is significant for the balanced development of both urban and rural areas.
In the past, pensions for rural and urban residents were separated without a transferal mechanism, and the system cannot keep up with the rapid urbanization of China, said Hu.
There was no clear policy on how to calculate a farmer's pension if his household registration, or hukou
, was transferred to another place, but the new program merges the two types of accounts, he noted.
According to the former pension system, rural residents should pay their pension contributions under a five-tier system ranging from 100 yuan ($16.46) to 500 yuan a year, while urban residents pay according to a 10-tier pension from 100 yuan to 1,000 yuan a year. Under the new scheme, both rural and urban residents can pay into a 12-tier pension scheme from 100 to 2,000 yuan, Hu said.
More options will "promote the balanced development of rural and urban areas and ensure the residents have equal option rights," Hu said.
There was no clear regulation as to how to transfer pensions from rural to urban areas if the workers made contributions in rural areas. Under the new system, people can transfer their rural pension to an urban pension account freely, which will benefit migrant workers, Hu said.
The country will establish life-long pension insurance accounts for those who contribute, according to a regulation issued and implemented by the State Council on Friday and published on the central government website Wednesday.
"The new system may face financial challenges," said Wang Guojun, a professor with the Capital University of Economics and Business.
"Resources are limited but people always have higher expectations for their pension," he noted.
However, Hu noted the country's pension funds account balance is in surplus, a sharp contrast to reports of a possible pension crisis that had led to public concern.